New financial authority!

BS OPINION

If debt restructuring is seen to be needed for the cellular industry's survival, the case for a recast has to be made in response to a specific demand.

Once that demand has been made, it is up to the lenders to respond, as is happening in textiles "" essentially, bankers are faced with the prospect of not getting back their money, and therefore figure out how to nurse the industry back to health.

In the instant case, no formal case has been made by the cellular industry for a debt recast "" there may be individual cases of companies looking to renegotiate their loans in view of the lower interest rate regime in the country, as happens in all industries all the time, but there has been no collective demand.

Even if there had been, it is up to the banks and financial institutions, and not the telecom regulator, to decide if they wish to be part of any such exercise.

It doesn't help that the telecom regulator is seen slipping up on its own job. For instance, it is also reported that Trai has scaled down its estimate of the size of the 'access deficit', or the amount that the state-owned BSNL had to be compensated for supplying uneconomic phone lines, from a whopping Rs 13,000 crore to a much lower Rs 4,000 crore.

And, while the cellular industry had been arguing all along that there was no 'access deficit' at all, Trai has not explained how the new figure has been arrived at, and why it should be believed this time.

In the event, it does look as if the debt-recast exercise is being proposed in response to something else, and is a case of the government trying to dish out a series of sops to the cellular industry to persuade it to go along with the unified licence proposal.

While a unified licence is indeed a solution to a lot of the telecom sector's problems today, as well as in the future, the fact is that it raises several thorny issues, including the issue of compensation to cellular companies, and whether it will include long-distance and international services in a single licence.

If the answer is in the negative to both, then it is merely a case of unifying cellular and basic/WiLL-mobile services.

If the government's final decision is seen as being partisan, all that will result is more legal dispute.

Because if the government offers around Rs 200-300 crore a year through the Deepak Parekh recommendations on lower licence fees, and now offers Rs 600-700 crore a year through the wholly extraneous issue of a debt recast, the cellular industry is almost certain to try its luck in the Supreme Court.