S Tel doubles revenue offer for licence

Telecom company S Tel Ltd has more than doubled the offer of revenues to the government for licences in all 22 circles in the country which it has applied for, adding a new twist to the spectrum controversy.

In a letter to Prime Minister Manmohan Singh on Thursday, the company offered to pay the government Rs 13,752 crore by the tenth year of operations. This is a huge increase from the Rs 6,000 crore it had committed to pay on November 5.

"By increasing our revenue share offer we are declaring our commitment and validating the potential revenues available to the exchequer from allotment of spectrum," said S Tel Director Santhosh Robert.

"We are keen to offer a spectrum efficient state-of-the-art telecom infrastructure and network on a pan-India basis. We can roll out services within six months of spectrum being allocated, hopefully, at an early date."

Chennai-based S Tel is promoted by Skycity Foundations and Mauritius-based Telecom Investments.

A copy of the letter has been sent to Union Minister for Communication and Information Technology Andimuthu Raja.

Robert explained, "Our additional offer is over and above the spectrum charges revenue share payable as per existing policy. In the event of any counter bid or auction of spectrum for GSM on a pan-India basis, we would like to reserve the right to increase this bid," he said.

Simultaneously, S Tel has committed to keep call charges within 30 paise a minute for the ten-year period.

Robert argued that current high tariffs were not due to economic reasons, but the result of spectrum hoarding and cartelization by GSM operators.

"The subscriber-linked formula evolved by TRAI and the Telecom Engineering Centre suggest subscriber volumes six and ten times respectively on the amount of spectrum allocated. Which is why it is in the public interest that spectrum is utilised more efficiently," Robert said.

According to its payment schedule, S Tel has offered to pay DoT a revenue share of Rs 252 crore in the first year of services, Rs 752 crore in the second year, Rs 1,502 crore in the third year, Rs 2,502 crore in the fourth year, and eventually Rs 13,752 crore in the tenth year.

The amount will be payable after allotment of 6.2 MHz of GSM spectrum in the 900 MHz frequency for all 22 circles, besides allowing sharing of active network and infrastructure.

Robert also said S Tel had secured financial backing to the tune of Rs 10,000 crore from "highly credible equity investors" for its pan-India GSM network.