Cell Operators

LETTERS TO THE EDITOR

As a response to the article Cellular companies mired in red by Josey Puliyenthuruthel (January 17), I would like to highlight the following issues.

The balance sheets of the cellular companies have to be seen separately in the context of the metro and the non-metro cellular operators because of the vastly different license fee structures and the economics of providing service to subscribers. By clubbing the two categories of operators together, a distorted picture has been presented in the article.

The licensee fees paid by all the eight cellular operators together for the current year is Rs 50 crore in comparison, the circle operators each paid an average license fees of Rs 50 crore, for each state in the current year (adding to a total of Rs 2,000 crore).

The existing number of subscribers are distributed so that more than 450,000 are from the four metros and the remaining 300,000 from the 42 circle networks. This also implies a much higher license fee burden per subscriber for the circle operators (Rs 14,000 per subscriber per month) in comparison to the metro operators (Rs 100 per subscriber per month)

One could, therefore, conclude that the balance sheets of the metro operators ought to be much healthier and many of them would, in fact, break-even in the current year, in comparison to the circle operators who do not see the possibility of breaking even for another six years unless license concessions are granted by the government.

Moreover, these issues were not entirely unforeseen by the cellular operators at the time of bidding, and in spite of this, the operators chose to bid a high fees to get the licenses. Hence, the government is not to blame for all the ills of cellular operators.