305 applications

The Department of Telecommunications (DoT) has received a total of 305 applications from 21 companies during the last week of submission for approval. In the previous week, DoT received around 100 applications, taking the total number of requests for telecom licences to 401.

The DoT had fixed October 1 as the last date for accepting applications.

Among the companies that have applied for pan-India licences include Bycell Communications, Next Generation, Avnija Properties, AT&T, Sterlite Infrastructure (Sterlite Group), Videocon Group, Silicon Infosys, Satvik High-Tech Builders and Cellebrum Communications among others.

These companies were seeking to commence operations from all the 22 circles in the country, sources in the telecom ministry said.

While companies such as ECME Telepower applied for 12 circles, Meta Telecom (7 circles) and Spurt Industry (6 circles), some players opted for single circle operations.

The companies opting for single circle operations include Electro Therm India (Gujarat) and RSK Enterprise (Jammu & Kashmir).

The major companies such as BPL Mobile (22 circles), HFCL (21), Datacomp (22), Spice Communications (20) and the Anil Ambani group companies Swan Telecom (14) and Cheetah (2), and Parsvnath (22) had applied for licences during the prior week.

The telecom ministry is expected to begin scrutiny of the applications in the next couple of weeks. Sources also said the ministry has received assurances from the Ministry of Defence for vacation of spectrum by the end of this year.

The DoT, which is also the licensor of telecom services in the country, had sought release of 45 MHz spectrum from defence establishments. Even though, this is unlikely, some spectrum would be released during the next two-three month period.

Consider only us - Cellular Operators Association of India

Cellular Operators Association of India (COAI) — the lobby for service providers using GSM technology — has demanded that all spectrum allocation for new circles and existing one should be made transparently on a first-come first-serve basis based on the date of application.

In its 30-slide presentation to Communications Minister A Raja, GSM operators have also demanded that incumbent GSM operators, whose licence applications are pending since December 2006, must be placed on a “different footing from other applicants and accorded top priority for issue if license and initial spectrum”.

The move will benefit telecom operators like Spice Telecom (which has applied for a licence in 20 circles) and Idea Cellular (which has applied for licences in nine circles) since December 2006 . It will also benefit Aircel, Vodafone Essar and Bharti Airtel, which have licences but are waiting for spectrum for over a year or two.

The meeting which was called by Raja to hear out the telecom operators was attended by Sunil Mittal, chairman of Bharti group , Asim Ghosh, CEO of Vodafone-Essar Ltd, Manoj Kohli, president of Bharti Airtel, Spice Telecom promoter B K Modi, Idea Cellular chief Sanjeev Aga and representatives of Reliance, COAI and the Association of United Telecom Service Providers — the CDMA-technology association.

Said T V Ramachandran, director general of COAI, “We have requested the government to differentiate between serious and non-serious telecom players.” Concerned with the deluge of applications for telecom licences — some 30 companies have applied for over 300 licences — the GSM lobby has suggested preference be given to companies with telecom experience and who are ready to accept a five-year lock-in period before they can sell their equity.

It has also recommended that the cross-holding restriction, under which one company cannot take more than 10 per cent in another company in the same service area, should be enforced rigorously.

Strongly attacking the recent deluge of applications, COAI in its presentation pointed out that interest from non-telecom companies appears to be driven only by financial speculation as a result of the flawed recommendations of the Telecom Regulatory Authority of India (Trai), which has created an impression of abundant spectrum availability. GSM operators pointed out that they did not rule out prospect of spectrum grabbing and subsequent sale at profit to foreign telcos.

Bharti peeved by govt's schoolmasterly treatment

Bharti Airtel, India's largest private mobile operator, today expressed concern over the government imposing penalties on "small issues", saying this hampers growth of the sector and spreads fear among investors.

"It is unfair to impose penalties. The Department of Telecom pulls out show cause notices for every small issue. This is hampering the growth of the sector," Bharti Airtel chairman Sunil Mittal said at a meeting of telecom minister A Raja with the operators here today. "It spreads fear among investors."

He cited an example of notices issued by the government to private telecom operators for having mobile telephony signals along the country's borders.

He also asked the minister to rationalise the duties being paid by telecom operators.

Raja held an hour-long meeting with operators and their associations to review the telecom scenario, and sought their suggestions before finalising guidelines and any policy relating to allocation of spectrum or issuing fresh licences.

Mittal also criticised the Telecom Regulatory Authority of India (Trai) over its recent recommendations on spectrum saying there were many technical faults. Trai issued eight corrections last week itself and asked Raja not to accept them without analysing their impact on the sector, he added.

Telecom License lock in periods ?

With the queue for telecom licences getting longer by the day, the department of telecommunications (DoT) is planning to introduce a lock-in period to weed out non-serious applicants. Such a lock-in is likely to apply on two counts — exit lock-in and ownership lock-in.

If implemented, a new applicant who is allocated spectrum to launch cellular services will be able to sell out only after operating for a certain number of years. At the same time, its promoters will not be able to sell their stake beyond a certain percentage during this period, despite the foreign direct investment (FDI) limit being at 74%. A final call on this will be taken by the DoT committee set up to formulate pre-qualification norms for applicants and screening guidelines for those that qualify.

When contacted, a government official close to the developments told ET: "There’s no final view since the matter is yet to be taken up by the Telecom Commission. Talks are at a conceptual stage, wherein an exit lock-in will prevent a new universal access service licence (UASL) applicant from exiting the business for a specified period. An ownership lock-in will be more complex as it will entail a defined set of norms that prevents the promoter group in a new licensee company from offloading its stake."

The official said the ownership lock-in will ensure a minimum equity investment in a company that has applied for a mobile licence for a specific period. "There is no decision yet on such a minimum ownership threshold. The matter will be discussed by the Telecom Commission shortly," he said.

Besides the possible introduction of exit/ownership lock-in periods, the DoT committee set up to put in place new norms to screen applicants is also looking at tightening roll-out obligations, increasing the net worth of companies eligible to apply, and reducing the 90-day deadline for companies to convert their letters of intent (LoI) into licences.

Sources said the options being explored involve raising the net worth to around Rs 2,000 crore from the current Rs 1,300 crore and companies being asked to convert their LoIs into licences within 10 days. Telecom minister A Raja had said recently: "All licences will be scrutinised and limited applications selected."

A global investment banker said "determining a workable ownership lock-in period will be a tough call, since all associated legal and commercial complexities will have to be weighed against the present financing requirements".

With companies making a beeline for cellular licences, DoT has constituted an agency consisting of members from different government departments to establish the actual identities of the promoters and shareholders behind the new applications. "DoT will do its bit to ensure offshore deals in the nature of ‘benami’ transactions do not transpire and there is genuine transparency," said the top government official.

DoT gets 500 applications

The frenzy over telecom licences came to an end on Monday with the tally touching the 500-mark as a number of biggies including AT&T, Hindujas, DLF, Sterlite and Videocon jumped into the fray to tap the world's fastest growing cellular market.

The figure may go beyond 500 as the Department of Telecom (DoT) is still counting the applications received from various companies as the deadline expired today. Nearly 200 applications are estimated to have been submitted today.

A senior DoT official termed the rush of applications as "sheer madness" and the Department would start scrutinising these documents soon. The DoT would screen the applicants once a committee appointed by Communications Minister A Raja comes up with fresh guidelines detailing the minimum net worth, ownership and other crucial aspects of the applicants.

Raja has already said that a select number of applicants would be selected. DoT would be following a two-stage screening process. There are allegations by GSM players' lobby COAI that many applicants are front companies of existing players who are trying to circumvent existing restrictions.

The companies which have sought licence include property developers Parsvnath, Unitech, Indiabulls Real Estate, Omaxe and DLF. Besides, Allianz Infratech, Shyam Telecom, HFCL, BPL, Cheetah, DataCom, Stel, Swan Telecom, Tulip, JSW Steel and Bycell also applied. Ispat Industries, Sify, Moser Baer and Dalmia Group are also believed to have put in applications.

US firm AT&T tied up with diversified group Mahindras and Hinduja Group applied through its subsidiary HTMT Telecom.

Most of the players have sought licences for all the 22 circles in the country. India is the world's fastest growing telecom market and existing players are adding more than eight million subscribers every month.

Mad rush for telecom licenses

US telecom giant AT&T Inc. is all set to begin a new innings in India. This time, AT&T will partner diversified auto major Mahindra & Mahindra Ltd. (M&M). The two have reportedly applied for telecom licenses in all 22 circles.

It may be recalled that in December 2004, AT&T sold its stake in Idea Cellular to Indian partners the Tata Group and Aditya Birla Group.

AT&T filed the application with Department of Telecommunications (DoT), in partnership with Mahindra Telecommunications Pvt. Ltd., a part of the M&M.

"This is an important step toward participating in India's upcoming spectrum allocation proceedings," AT&T said in a statement.

Indian regulations allow Foreign Direct Investment (FDI) of up to 74% in the telecom sector.

Separately, real estate companies DLF and Omaxe, IT solutions firm Tulip IT and cable television provider Hinduja TMT applied for telecom licences on the last date for filing applications.

AT&T and Tulip already have licences to provide National Long Distance (NLD) and International Long Distance (ILD) services in India.

DLF and Omaxe join other real estate firms like Indiabulls Real Estate, Unitech and Parsvnath Developers in applying for telecom licenses. Over the last few weeks, the DoT has received about 250 new applications for new universal access service licences.

Earlier, a newspaper reported that the DoT was planning to introduce a lock-in period to eliminate non-serious players, amid a mad rush among companies to obtain new telecom licenses before the window closes today.

As per the proposed lock-in conditions, a company will be able to sell telecom licenses only after operating for a certain number of years. At the same time, promoters will not be able to reduce their shareholding beyond a certain limit.

Some industry analysts say the scramble for getting new telecom licences is due to telecom regulator TRAI's latest recommendation that the number of players in a circle should not be capped.

TRAI has also recommended that the current norm of allocating 2G spectrum based on the number of subscribers should be increased several times before existing players are allocated fresh spectrum.

If these TRAI recommendations are accepted by the DoT, then several new applicants will be eligible to get spectrum to launch telecom services.

However, some experts are of the view that the rush for telecom licences is aimed at making a quick buck by first getting the licences and then selling the same to overseas players at a hefty premium.

To get to the bottom of the matter, the DoT is believed to have set up an agency to establish the actual identities of the promoters and shareholders behind the new applications for telecom services.

Telecom Minister, A Raja, said on Sept. 24, that the ministry will prepare a fresh set of guidelines for grant of licences to new applicants. "I have asked DoT secretary, DS Mathur to form a committee to frame guidelines for grant of licence to new applicants,” Raja said.