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Trai to formulate exit policy for telcos

Mansi Taneja & Surajeet Das Gupta  |  New Delhi 

Request comes from DoT; consultation paper likely as first step.

In a move which should help consolidation in the telecom sector, the department of telecommunications (DoT) has asked the Telecom Regulatory Authority of India (Trai) to formulate details of an exit policy for service providers wishing to quit.

Some of the dozen-odd operators allotted a Unified Access Service licence by former telecom minister A Raja in 2008, when confronted with the steep competition, had decided to limit their services to certain areas or had dropped plans of launching these in other circles.

The Telecom Commission, the highest policy making body of DoT, has already approved the proposal for an exit policy, DoT said in an internal note dated August 18.

Trai would issue a consultation paper on the issue and give its recommendations after views from all stakeholders.

Under current licencing norms, there is no exit route for operators who’ve taken a UAS licence. Under the terms, a pan India operator has to pay Rs 1,650 crore for such a licence, but has no option to surrender it with the start-up spectrum of 4.4 Mhz and get the entry fee back from the government. Put another way, the government would keep the money if an operator quits. Nor is a refund given if an operator surrenders the spectrum following a merger with or acquisition of another company having spectrum in the same service area.

The contentious issue came into the open when Loop Telecom, one of the new operators, made an offer in the Supreme Court this year that it auction its licence, along with spectrum for 21 circles, and refund the money it had paid for these. And, earlier, too, when DoT had asked Idea Cellular to surrender six overlapping telecom licences, which it had got after its acquisition of B K Modi’s Spice Communications some years before. DoT said there was no question of returning the Rs 800 crore Idea had paid as the fee for the licence in these circles. The licences were for rolling out 2G services in Punjab, Karnataka, Andhra Pradesh, Delhi, Haryana and Maharashtra.

Many of the incumbent operators had also supported the move, as they argued this would help in freeing scarce spectrum, required by the others for their expansion and which was not available.

After Trai recommended cancelling 74 new licences due to failure in meeting rollout obligations, DoT has been exploring ways to offer some of the service providers a way out of the impasse, in which they could take advantage of an exit policy for failure to meet their roll out obligation, rather than face a stiff order for cancellation.

Some of the new players, including Videocon, Etisalat DB and Loop Mobile, have either not launched services or launched in selected circles. Many have also approached the government for an exit route. Norway’s Telenor, which acquired a majority stake in Unitech Wireless, has launched its services under the brand name of Uninor. Sistema Shyam has also rolled out CDMA-based mobile services.

DoT has also referred back some of the earlier recommendations of Trai on spectrum management and other licensing issues, which included norms on merger and acquisitions, pricing of excess 2G spectrum and other issues. After the report of an internal committee of DoT, which examined all the Trai recommendations, the Telecom Commission had met to take a final decision.

However, based on the report of an internal committee, which had not agreed on some of the points, coupled with differences in the Commission, it was decided the recommendations would be referred back.

First Published: Thu, August 25 2011. 00:35 IST