New telecom licensees have reneged on their rollout obligations in the first year. Many of them are yet to place equipment orders with vendors though they were granted licences on January 27, 2007. Naturally, the department of telecommunications (DoT) is not amused and is in the process of serving notices on five defaulters?Swan Telecom, Unitech Wireless, Datacom, Loop Telecom and S Tel.
The licensees were supposed to roll out at least 10% of the committed services in various district headquarters in the first year. The companies have been granted spectrum for some circles and were required to roll out wireline services in the remaining circles.
Sistema Shyam, which has licences for 22 circles, is the only company that rolled out any service?that too in one, the Rajasthan circle?in the entire year.
According to the licence condition, DoT can impose a fine of Rs 5 lakh a week for the first 13 weeks of delay, Rs 10 lakh for the next 13 weeks and thereafter Rs 20 lakh for delays of u p to 26 weeks. If any operator fails to fulfil the obligation even after 52 weeks of delay, then DoT has the power to cancel the licence.
DoT sources said the notices are being prepared and would be sent out shortly to these companies.
Earlier, DoT was trying to relax the rollout obligations for these firms by relaxing the guidelines mandating the first year obligations and only audit the rollout obligations at the end of the third year when the companies are required to complete 50% of the district headquarters in their respective circles.
However, the proposal has not been processed as yet because of several glitches. In the first step, DoT needs the approval of the Telecom Commission, the apex policy-making body, to approve the proposal.
Second, it needs to refer the matter to the Telecom Regulatory Authority of India (Trai) since the move involves changing the terms & conditions of licence agreement. Trai would then float a consultation paper, invite stakeholders? comment and then finalise its recommendations. All this would take a couple of months, at least.
So, DoT now does not have an option but to serve notices to the defaulting companies.
According to industry sources, none of the five companies have placed equipment orders with vendors. Swan Telecom, which has licences for 13 circles, has only signed an intra-circle roaming pact with the state-owned Bharat Sanchar Nigam Ltd. The company is mired in investigations ordered by DoT and the ministry of corporate affairs on its ownership details and whether any official favours were granted to the company. UAE?s Etisalat has picked up 45% stake in the company.
Unitech Wireless, in which Norwegian major Telenor would buy up to 60% stake and has licences to provide services in 22 circles, is yet to see the first instalment of funds being given by Telenor as an important pre-condition of tying up tower sharing.
Communications & IT minister A Raja has been under fire for granting licences to these firms at 2001 prices, with two firms, Swan and Unitech, offloading stakes to foreign firms at valuations of around $2 billion, leading to charges that Raja had caused losses to the national exchequer.
While defending himself Raja has maintained that once these firms start services there would be greater competition leading to more tarrif falls.