DoT mulls slab-based penalty model for telcos

However, telecom ministry yet to finalise minimum and maximum penalty that would be imposed on telecom operators

The Department of Telecommunications (DoT) is considering adopting a slab-based model to penalise telecom operators in case of irregularities and violation of licence norms.

“We are working on the issue. The most likely alternative to the existing model is a slab-based model. In this model, the quantum of penalty will vary depending on the nature of violation,” said a top official of DoT. However, the telecom ministry is yet to finalise the minimum and maximum penalty that would be imposed on telecom operators. “We hope to finalise the matter soon,” said the official.

So far, the government has been following a model where it imposes a Rs 50-crore penalty for each circle, irrespective of the pattern of violations and irregularities, for which it has been vastly critised by the industry.

In April last year, the Telecom Regulatory Authority of India (Trai) had recommended classifying penalty in two categories — minor and major. The regulator had suggested imposition of a maximum penalty of up to Rs 25 lakh in case of minor violation and up to Rs 10 crore for a major violation.

Kapil SIbal, minister of communications and IT, has also said many times that when DoT imposes high penalty, telecom operators usually contest it before courts, leading to delays in realisation of amounts.

According to industry estimates, the DoT has imposed total penalties of more than Rs 6,500 crore on telecom companies during the past few years. However, the Government has not been able to collect almost the entire amount that it has fined.

The areas of irregularities and violations for which telecom companies are being fined include alleged violation of radiation norms, matters related to subscriber line data (SLD) and for offering 3G services through intra-circle roaming (ICR) pacts in certain circle where telcos do not have required licences.

However, if the proposed one-time fee to be added with this as telecom operators will have to pay for the additional spectrum holding beyond the minimum allocation, the total amount that telecom companies will have to fork out will cross Rs 38,500 crore, which is about one-fourth of the net annual revenue of the sector.

Penalty is a concern for the industry as telecom operators are already sting on a debt burden of about Rs 2.5 lakh crore in 2012-13, an increase of more than 200% from Rs Rs 82,726 crore in 2008-09.