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.