Revised Pacts To Hit Profitability Of Telecom Firms

Certain revised clauses in the licence and interconnect agreements for basic telecom services threaten to adversely affect the business plans of the operators. The department of telecommunications (DoT) gave basic operators copies of the redrafted clauses at a meeting on Monday.

While company representatives are willing to gloss over the modified assignability clause on which they have some reservations, they are upset over the revised clause on the right for carriage of cellular traffic. The clause which disallows basic operators to carry national and international long-distance calls originating from cellular networks will cut about 10 per cent of projected revenue, say basic telecom operators.

 

This is against the guidelines in the tender (calling for private participation in basic telecom services). All that the tender has said is that we will not be allowed to carry inter-circle calls; it clearly allows us to carry traffic within the circle, a top executive of a basic telecom company said.

According to the revised clause on right for carriage of cellular traffic, the basic service operator will not be permitted to route the traffic originated from GSM network for inter-circle and international calls, which will have to be routed through DoT network. This renders basic-cellular connectivity announced some months back totally meaningless, a source said.

Basic telecom operators are allowed to carry long distance calls within a circle but not inter-circle traffic. The tender allows companies to charge 50 paise per minute of STD (subscriber trunk dialling or national long distance) calls. Basic telecom companies plan to route cellular-to-fixed long distance calls within the circle over their networks.

The basic operators had planned to carry inter-circle and international call traffic from cellular networks up to the farthest interconnect point with DoTs network within their circle of operations. Such routing of calls was expected to bring in a significant amount of revenues.

The revised clause on right for carriage of cellular traffic also disallows calls originating from metro circle cellular networks to be carried by the basic telecom operators. Such calls will necessarily be routed only through DoT network the clause says. This revision will negatively impact revenues of companies like Hughes Ispat in Maharashtra and Basic Teleservices in Tamil Nadu because the circles include metro cities like Mumbai and Chennai.

Therefore, cellular calls out of Chennai to, say, Kanyakumari will have to be routed over DoTs network. Cellular operators in the metros will not have the choice of routing traffic over private basic operators networks. The situation gets particularly bad in the case of Mumbai in Maharashtra. There is a significant amount of cellular traffic going out of Mumbai to the rest of the state.

DoTs insistence on making the licences assignable only to domestic lenders has also given rise to uncertainty among the brass in basic telecom companies. The way financing is structured, domestic financial institutions and banks will contribute only about 10-15 per cent of the total funds of the project. Why should the licence be made assignable to Indian lenders? a source asked.