Crisis at MTNL: State-run telco seeks two-year breather as licence expires on April 6

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Updated: March 29, 2019 7:13:38 AM

MTNL, which started services in Delhi and Mumbai in 1999, says that it had done so on a basic service licence and not a cellular mobile telephony licence, which it got in January 2001.

MTNL, CMTS licence, DoT secretary Aruna Sundararajan, MTNL 3G services, Bharti AirtelMTNL has written that in the event the DoT does not agree with MTNL’s request it should issue specific and unambiguous instructions to it to close down its services after April 5.

Loss-making state-owned telecom service provider Mahanagar Telephone Nigam (MTNL) may be lucky enough to get a two-year breather for renewing its 20-year licence, which gets over on April 6, for which it needs to pay a renewal amount of around Rs 11,000 crore.

In a series of letters written to the department of telecommunications in the last few months, the company has raised a technical point, under which it says that the year of licence allocation to it should not be taken as April 5, 1999 but January 11, 2001. Hence, its renewal should come up in January 2021 and not next month (April 6). MTNL, which started services in Delhi and Mumbai in 1999, says that it had done so on a basic service licence and not a cellular mobile telephony licence, which it got in January 2001.

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The basic service licence was for landline services and since it started mobile services under it (this was possible then through what was called limited mobility), its service area was restricted to just Delhi and not the national capital region which includes Noida, Ghaziabad, Faridabad and Gurgaon. Similarly, in Mumbai, it did not include the Kalyan area.

MTNL’s logic is that since its private sector peers had a CMTS licence which included these areas, it was competitively in a disadvantageous position and could not fully commercially exploit its licence. It was a non-level playing field. Remember, those days there was STD dialling between Delhi and Noida and charges were very high and one paid for even an incoming call on mobile phones.

MTNL chairman and managing director PK Purwar has said in a recent letter to DoT secretary Aruna Sundararajan that in 1999 its licence was “non-standard” and became “standard” and “at par” with private operators in terms of geographical coverage only since 11.01.2001. “It is the unique and only case in entire telecom licensing regime where CMTS licence is granted with non-standard operating area as per restricted basic service licence geographical area in deviation of prescribed and defined standard licence area laid down under CMTS licence regime,” MTNL has written.
It has buttressed its case that its licence period should be seen till January, 2021 through a legal opinion of Vikramjit Banerjee, additional solicitor general, government of India.

If the government does not accede to MTNL’s request, it has no option but to shut down its services (mainly 2G as it got 3G spectrum in 2010 so its validity continues), as it has no money to pay for renewal of licence. “Non-correction of effective date of MTNL’s CMTS licence to 11.01.2001 will ultimately result in closing down of services beyond 05.04.2019 to MTNL mobile subscribers and in-roamer customers of BSNL. In order to continue providing uninterrupted mobile services, the extension of MTNL’s CMTS licence along with spectrum is an urgent necessary,” the CMD has written to the DoT secretary.

MTNL has written that in the event the DoT does not agree with MTNL’s request it should issue specific and unambiguous instructions to it to close down its services after April 5. In case the DoT does not give any such instruction it will continue to operate the services based on the legal opinion it has received from the ASG. It has even said that if the government does not accede its request it may seek legal remedies.

In the event of any closure of MTNL’s services, its 1.5 million 2G users would be affected but only theoretically since they will have the choice to upgrade to either MTNL’s 3G services or port out to 2G services of Bharti Airtel or Vodafone Idea.

MTNL curently has 6.2 MHz spectrum in 900 MHz band and 2.2 MHz in 1800 Mhz band. The company is willing to surrender entire airwaves in 1800 MHz band and retain 5 MHz in 900 MHz band. However, even in this case it will have to shell out `8,000-9,000 crore. MTNL’s total subscriber base between Delhi and Mumbai circle is 3.7 million, of which 40% are 2G users.

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