Several were to expire in five years; valuations may rise.
In a definite signal that mobile phone service providers are not going to lose their licences even after the scheduled end of their validity, the Department of Telecommunications (DOT) has asked the Telecom Regulatory Authority of India to recommend terms and conditions for extending the licence periods forever.
This applies to the cellular mobile telephony licences issued initially, as well as the unified access service licences issued in later years after a policy change. Both were granted for 20 years and could be extended by another 10.
| THE BIG EIGHT OF 1994 |
| DELHI |
| >> Sterling Cellular (Vodafone-Essar) |
| >> Bharti Airtel |
| MUMBAI |
| >> BPL (Loop Mobile) |
| >> Max-Hutchison (Vodafone-Essar) |
| CHENNAI |
| >> Skycell (Bharti Airtel) |
| >> RPG Cellular (Aircel) |
| KOLKATA |
| >> Usha Martin (Vodafone-Essar) |
| >> Modi Telstra (Bharti Airtel) |
| Between 1995-98, 14 companies were given 34 licences for 18 circles across the country |
| (The company named in bracket is the name of the current company which holds the licence) |
Eight licences in the four lucrative metropolitan markets are slated to expire in 2014, followed by another set in the subsequent three years. Mobile phone licences — two in each of the four metros — were first issued in 1994, on payment of a fixed fee, for 10 years. Between 1995 and 1998, 14 companies obtained 34 more licences for 18 circles across the country. The New Telecom Policy of 1999, which moved this industry to a revenue-share model, also extended the life of licences to 20 years.
The fresh view of DoT, the government arm that formulates telecommunications policy, is that licences should stay valid in perpetuity so long as their owners keep paying the annual revenue share and meet all the other conditions.
“We expect the valuation of mobile licence holding companies to go up by at least 10 per cent as a result of this move. It will also make it easier for them to sell equity,” says the director of an upcoming mobile service provider.
The issue of validity was becoming complicated with the imminent start of the third generation of mobile services, or 3G, which enable high-speed data transfer. “The government is auctioning 3G spectrum this year for 20 years. Many of the initial operators could be in a situation where they could have the spectrum, for which they are going to pay through their nose (the price suggested by the finance ministry is Rs 4,040 crore), but not have the licence to operate. By making the licences valid in perpetuity, this apprehension would be addressed,” says T V Ramachandran, secretary-general of Cellular Operators Association of India, the GSM lobby.
Not everyone agrees. Mahesh Uppal, a Delhi-based analyst who specialises in regulatory affairs, says it is a bad idea. “You should not give spectrum, which is a scarce resource, in perpetuity until you determine a market value of it and charge it from the operators. What should be done is to separate the spectrum from the licence. The licence is just an authorisation for you to undertake services and there is no cap on its number.”
DoT’s message to Trai has pointed out that a committee set up in June last year to give recommendations on subscriber-linked allocation of spectrum — its members were from DoT, C-Dot, the defence ministry, Indian Institutes of Technology and Indian Institutes of Management — submitted a report last May and recommended that licences should be given in perpetuity.
