At a time when investigations are in full swing in the 2G spectrum scam, the telecom ministry has started working on a policy to provide an exit route to exactly the same set of operators who are under probe.
An internal committee of the department of telecommunication has suggested that the Telecom Regulatory Authority of India (Trai) be asked to recommend an exit route policy for the telecom licensees who wish to surrender their licences and the spectrum.
The policy will essentially entail surrendering of the 4.4 Mhz of spectrum allotted to these operators.
Former telecom minister A Raja had also planned an exit route but before any progress could be made the 2G scam took its toll and he was forced to resign and is now under investigation and in jail.
DoT’s latest move is significant because before formulating any policy the norm is to elicit the recommendations of the regulator. Some of the new operators have been lobbying for an exit route since they are finding it impossible to endure the cut throat competition in the telecom market.
?At present the telecom industry is close to $30 billion. However it is Ebidta negative and even if you take the incumbent operators together they are marginally Ebidta positive and yet profit after tax is negative,? Prashant Singhal of E&Y had earlier told FE.
In such a fiercely competitive market, new operators are struggling to attract customers and find viable sources of funding. Together the new operators comprise less than 5% of the 800 million plus subscriber market. The decision also assumes significance as this would show that A Raja’s move to allot licences at the 2001 prices without a market discovered mechanism in the year 2008 was a wrong decision and in essence proves that there was no business case to allot licences with bundled spectrum at throw away prices.
It remains to be seen whether the exit route would also mean that the government refunds some money to these operators. Ideally, it would be difficult since the charge is that these firms were sold licences at below market price.