Cellular Licences To Become Assignable

"When we allowed assignability for basic service licences (on October 17), it was implicit that cellular operators would also be allowed the same feature," a DoT official said. He, however, clarified that DoT had not received a request for assignability from any of the cellular companies.

This ends speculation among cellular companies whether their operating licences would be allowed assignability or not. Assignability allows transfer of licence to lenders and its eventual sale if an operating company defaults on loan repayments or in case of bankruptcy.

In the last few weeks after DoT allowed assignability of basic telecom service licences, telecom companies and bankers had expressed apprehension whether cellular licences also fall under the purview of the order.

 

"They (DoT) had not specifically mentioned assignability for cellular licences. Also, when the FIs were demanding assignability, it was more for basic service licences rather than cellular companies," one telecom official said. Cellular operators are now expected to formally request DoT for assignability.

Assignability of the licences was a bone of contention between basic telecom licencees and DoT for some months prior to the October 17 decision. The operators and potential lenders like FIs were categorical that their projects would not get funding without assignability.

The department, however, was reluctant because assignability would in effect amount to transfer of the licence. The tender guidelines for private entry into basic telecom services disallows transferabilit. Assignability is defined as the "making over of any right to another"; which in other words means a transfer of the "right" (the licence, in this case).

Assignability was perceived as critical only for basic telecom projects because of the FIs' reluctance to sanction loans without it. This, ironically, was thanks to the huge licence fees quoted by the promoters of the projects.