DoT asked to give details of NLD rate cut impact

Licence fee to be reduced to 6%, to result in Rs 400-cr loss

The finance ministry has asked the department of telecommunication (DoT) to give details of how the government's non-tax revenue will be affected by the reduction in licence fees for national and international long-distance services. The licence fees will be reduced from 15 per cent to 6 per cent of the adjusted gross revenue (AGR) from January 1, 2006.

The cut is expected to result in Rs 400-crore loss to the Centre, which had budgeted for a non-tax revenue of Rs 6,000 crore from the telecom sector during the current financial year.

The finance ministry has also asked the DoT to furnish details of the powers delegated to the telecom commission headed by the telecom secretary. The finance ministry was not consulted when the reduction in the licence fee was decided, officials in the North Block said.

Officials further told Business Standard that the DoT was calculating the impact on dividends to be paid by the Bharat Sanchar Nigam Ltd and the Mahanagar Telephone Nigam Ltd during the current fiscal following the decision to reduce licence fee.

The reduction in licence fee to 6 per cent of AGR was in line with Trai's unified licensing recommendations which were submitted to the DoT in January 2005.

The department has fixed the entry fee for ILD and NLD at Rs 2.5 crore each. But the Trai had recommended that the entry fee be fixed at Rs 107 crore and gradually reduced to Rs 30 lakh in the sixth year.

The registration charges recommended by the Trai were based on the entry fee paid by the new basic service operators, which entered the market in or after 2001.

The DoT has also decided against compensating the existing licence holders like Bharti and Reliance Infocomm, before allowing NLD operators to enter, as demanded by them. Trai too had said the demand was "not justified" as they had not met around 40 per cent of their rollout obligations (at the time of the recommendations).

Besides, the regulator said the transmission system installed was not exclusively for NLD services. WRONG NUMBER?

Licence fee reduction to 6% of AGR is in line with Trai's unified licencing recommendations

Entry fee for ILD and NLD at Rs 2.5 crore each, against Trai's recommendation of Rs 107 crore

No compensation likely for existing licence holders like Bharti and Reliance Infocomm, before allowing NLD operators to enter