The department of telecommunications (DoT) has rejected a key Telecom Regulatory Authority of India (Trai) recommendation that sought to weed out non-serious players by imposing rigid rollout obligations before a new licensee could be sold.
The move comes as good news for the 45 companies that have applied for as many as 575 unified service access licences as there would be no restriction on them cashing out once they obtain a licence and are allotted spectrum. For existing players, the valuable spectrum alone makes these new players attractive acquisition targets, even at hefty valuations.
Official sources said DoT has written to Trai informing it of its decision to reject the lock-in clause. No such rollout obligation exists under current norms. Communications & IT minister A Raja has already told Parliament that new telecom licences would be dealt with in accordance with existing policy, which means for a pan-India operation, an applicant would have to pay about Rs 1,600 crore in licence fees and would be allotted a start-up spectrum of 4.4 MHz.
In an interview with FE in September, Trai chairman Nripendra Misra said the authority had recommended that a new service provider should ensure that in metros, 90% of the service area is covered in one year. In telecom circles, at least 10% of district headquarters should be covered in the first year and 50% in three years. ?All these measures will dissuade non-serious players and ensure that such players do not get unearned gains,? Misra added.
DoT?s rejection of the lock-in clause frees new pan-India licensees from making the Rs 8,000-crore estimated investment required to comply with Trai?s recommendations. According to industry sources, an initial investment of Rs 300-500 crore would be needed in each circle for a licensee to make its presence felt.