Cell Operators Allowed To Assign Licences

The government yesterday allowed cellular operators to assign licences in favour of their creditors.

A government statement said: The DoT has permitted all cellular operators to assign their licences in favour of their lenders.

The first such tripartite agreement was signed yesterday between DoT, IndusInd Bank Ltd and Modicom Networks. Modicom is a joint venture between Indias Modicorp, Hong Kongs Distacom Communications Ltd and Motorola Inc.

The assignment status tripartite agreement empowers financial institutions and banks to seek award of the licences to third parties in the event of default in payment of licensors dues and loans. This will help private operators to secure loans from banks and financial institutions, the statement said.

The assignability of licences has been a long-standing demand of cellular operators who continue to face difficulties in raising funds for financing licence fee instalments and setting up networks.

The statement quoted the chairman of the Telecom Commission, A V Gokak, saying that the agreement is another important milestone to further strengthen the process of liberalisation in the telecom sector.

Modicom holds the cellular licences for the Karnataka and Punjab telecom circles. IndusInd bank is the Indian agent for the consortium lenders of the project.

Cellular services are already operational in 15 of the 18 telecom circles and the four metros.