Hughes Ispat Inks Licence Agreement

Hughes Ispat Ltd (HIL), the basic telecom services letter of intent (LoI) holder in Maharashtra, yesterday signed the licence and interconnect agreements for the state with the department of telecommunications (DoT). The company also paid the first instalment of licence fees amounting to Rs 397.50 crore.

Hughes Ispat was the only company which inked the agreements yesterday the deadline set by DoT. The company, however, did not sign the pacts for Karnataka, the second circle it holds an LoI in. Four other companies holding LoIs Essar Commvision, Tata Teleservices, RPG-led Basic Teleservices and the Usha groups Techno Telecom also did not sign the agreements.

 

Hughes Ispat becomes the third basic telecom company in the country to sign the agreements with DoT. Reliance Telecom and Bharti Telenet signed the agreements earlier this year for the right to provide basic telecom services in Gujarat and Madhya Pradesh.

Essar Commvision, the LoI holder in Punjab, has asked for a months extension to sign the pacts while Tata Teleservices which holds the LoI in Andhra Pradesh has requested two-months time. Finance ministry sources were, however, hopeful that the companies would sign the agreements within three weeks.

Telecom commission chairperson A V Gokak is reported to have called a meeting of representatives of the basic telecom companies today to convey the governments decision on an extension of the deadline. DoT sources said the government is likely to allow the companies more time, but would impose penal interest on the first tranche of licence fees.

The agreement allows us to impose penalties of five per cent over the prime lending rate, which would work out to about 20 per cent today, a senior DoT official told Business Standard yesterday.

Until late last evening, the telecom commission had not decided on the fate of LoIs of Basic Teleservices and Techno Telecom. DoT has not sent copies of the licence and interconnect agreements to the companies since they have cases pending against it in the Delhi High Court. The companies had challenged a DoT move to encash their bank guarantees late last year after they did not accept the letters of intent.

The Maharashtra project of Hughes Ispat a joint venture between Ispat Industries, Hughes Electronics and Alltel Corporation envisages a total investment of some Rs 12,600 crore over the next 15 years in network equipment. In the first few years alone, the company will invest over Rs 3,500 crore. Besides this, it has committed to pay the government Rs 13,909 crore in licence fees.

The Hughes-Ispat-Alltel venture plans to deploy wireless in local loop (WiLL) and fibre in loop technologies in Maharashtra.