Telecom minister A Raja?s attempt to pave an exit route for telecom operators who were granted licences and spectrum through questionable means in 2008 has not found favour with the Comptroller and Auditor General of India (CAG). Most of these operators?who have a poor record in rolling out services?wish to cash out, but are prevented from doing so, due to strict norms on telecom M&As and rollout obligations.
In a strong note, CAG warned the Department of Telecommunications (DoT) against coming out with any such exit proposal. In a letter to the DoT secretary, the director-general of audit, post and telecommunications says: ?Allowing operators to exit the sector after allotment of spectrum but before achieving their rollout obligations would mean that they were hoarding a valuable national resource without paying any revenue share to the national exchequer.?
The D-G has reminded DoT that earlier too, the CAG had found serious omissions in issuing licences to telecom operations in question without properly verifying their eligibility and credentials.
FE was the first to report on August 30 that the government has started working on an exit route to the new telecom operators. Thanks to the absence of viable business models in a market crowded with 14 operators, the new telecom operators have been facing problems raising funds to roll out operations. On September 14, Raja confirmed the move saying, ?Bailout may be done. It will be discussed in the telecom commission.?
New operators have a dismal record so far in terms of rolling out services and attracting subscribers. The new entrants account for less than 3% of the country?s over 600 million subscribers. M&A rules in telecom have made it difficult for them to cash out. To prohibit new entrants from making unearned gains, the government has put in a three-year lock-in period during which promoters have been barred from selling their equity.
Out of the eight licence winners, only two have started services, that too only in some of the circles for which they received the licence.
The licence condition requires new licensees to cover at least 10% of district headquarters by the end of the first year of being given the licences and 50% by the third year. The government can levy a fine on them for delay in rollout, after which their licences can be scrapped.
