Mtnl Cautioned On Equipment Buys

The Delhi High Court yesterday cautioned Mahanagar Telephone Nigam Ltd (MTNL) against purchasing equipment to roll out its controversial cellular network in Delhi and Mumbai, saying that such a purchase would be at its own risk.

Acting on a petition filed by Cellular Operators Association of India (COAI), Justice Anil Dev Singh issued notices to the department of telecommunications (DoT) and MTNL."If MTNL purchases any equipment it can buy at its own risk and cost," the judge said while fixing September 18 for final disposal of the case.

MTNL plans to set up cellular networks in Delhi and Mumbai costing some $125 million (over Rs 525 crore) each by March 1999.

 

It has received quotes from seven cellular telecom vendors for the equipment and is in the midst of a techno-commercial evaluation of the bids.

The financial bids are to be opened in a month or two.

The operators in their petition sought the quashing of the amendment to the MTNL licence which allowed it to offer cellular service in Delhi and Mumbai.Counsel for operators Manjul Bajpai clarified that this petition was not an appeal against the earlier order of the high court which paved the way for MTNL's entry into cellular telephony market last month.

He said that the petition does not raise the issue of jurisdiction of the Telecom Regulatory Authority of India (TRAI). "The petitioners in this case_ COAI and Hutchison Max Telecom Ltd were in fact not a party to the earlier petition on the same issue filed with the TRAI," Bajpai said.

COAI counsel contended that MTNL cellular licence was issued without following any tendering process, was arbitrary and was a "gross abuse of powers by government ...resulting in procedural impropriety, irrationality and illegality".

Further, it was pointed out, the cellular licence only allowed for the "telecom authority" stepping into cellular telecom services.

The Indian Telegraph Act, 1885 defines "telecom authority" as the secretary, DoT. MTNL is not the department, COAI petition points out, and therefore cannot be awarded the licence without a tendering process.

It was in violation of national telecom policy of 1994 and threatened very existence of private operators, he added. The operators apprehend that MTNL could use its interconnect revenues from four cellular operators in Delhi and Mumbai, which was Rs 136 crore in 1997-98, to subsidise its cellular service.

They questioned the logic of MTNL investing Rs 1,070 crore in Delhi and Mumbai at a time when spare capacity was available in networks of private cellular operators. "This investment by MTNL at a time when there is acute scarcity of foreign exchange due to economic sanctions is not called for. The entire cellular equipment will have to be imported by MTNL entailing outgo of foreign exchange," the operators said. MTNL will be able to offer more attractive packages by bundling both cellular and basic services, which private operators cannot do because they do not operate basic services, the COAI petition added.