Telcos to move TDSAT for compensation

Some of the telecom operators, whose Unified Access Service Licence (UASL) to provide 2G services were cancelled by the Supreme Court last week plan to approach the Telecom Disputes Settlement Appellate Tribunal (TDSAT) to demand financial compensation from the government. They also have in mind a review petition in the SC. The compensation demand would include paying back the licence fee, with interest, as well as for the investment they’ve made on their networks. The operators had paid Rs 1,651 crore each for a pan-India UASL licence.

Uninor, Sistema, Etisalat and S Tel have said they are contemplating various legal options to protect their investments. “We are waiting for the order for the government that our licences have been cancelled. After that, we will approach TDSAT for compensation and even the Supreme Court if necessary” said a top executive of a telco whose licence has been cancelled. He said the judgment hadn’t blacklisted any of the companies but it had said the government policy of giving a licence on a first come, first serve basis was not right. If so, they do not have the right to charge a licence fee, he added.

The SC had ordered cancellation of all the 122 UASL licenses issued in January 2008 by former telecom minister A Raja. It also directed the Telecom Regulatory Authority of India to make fresh recommendations for the auction route within four months.

The eight companies together have invested Rs 35,000-40,000 crore. Two-thirds of this has been put in by two telcos, Uninor and Sistema. Of this, about Rs 10,000 crore has been paid to the government as licence fee. The operators have also put up a network across various parts of the country, which already supports 7.2 per cent (71 million) of mobile subscribers.

The companies whose licences have been scrapped, apart from Uninor (a joint venture between Norway’s Telenor and the Unitech Group), Sistema Shyam (JV between Russia’s Sistema and Shyam Telecom), are S Tel, Videocon, Idea Cellular, Tata Teleservices, Loop Mobile and Etisalat DB (JV between UAE’s Etisalat and Swan Telecom).

Etisalat, the third foreign investor, said it would work closely with its Indian unit's management and legal counsel to understand the judgment, ramifications on operations, particularly customers and employees, as well as its right to a review of the decision.

Some months earlier, Loop Telecom had approached the court with an offer. It said it was willing to return the 2G spectrum and let the government auction it, and return them the licence fee they’d paid.

Analysts say the government won’t have a problem in paying compensation if it comes to such a situation, since it is expected to collect Rs 75,000 crore from the fresh 2G auction. This is based on the assumption that the entire 28 Mhz of spectrum per circle comes for auctioning in one go.