DoT issues 9 LoIs, gets over Rs6,500cr as fee

Amid tight security and an altercation with HFCL chief Mahendra Nahata at Sanchar Bhawan, headquarters of the Department of Telecom (DoT), nine companies among 45 applicants were offered letters of intent (LoIs) for unified access service licences (UASL).

Within hours, a number of these companies paid the required fees and were allotted licences, but not the spectrum, the radio frequencies that enable wireless communications.

Among them were BK Modi's Spice (which received only four licences though it had applied for 20), Idea Cellular, Tata Teleservices, Swan Telecom, STel, Datacom, Shippingstop.com, Unitech and Shyam Telelink.

Around eight of these companies paid the required licence fees and bank guarantees by late evening. By some estimates, the government received around Rs 6,500 crore from non-refundable licence fees alone from some of these companies (they have a 15-day payment limit).

All companies have also deposited substantial financial and performance bank guarantees with DoT.

They will now queue up for yet another newly introduced licence "" the Wireless Operating Licence "" which will be granted on a first-come, first-served basis, subject to availability of spectrum.

By adding over four additional GSM players in each circle, the government has introduced more competition in the mobile space, and consumers can expect a dramatic fall in tariffs once these operators start their services.

In a related development today, the government also issued a letter of intent to Tata Teleservices in 20 circles to operate GSM-technology services under the crossover technology policy.

With this, the Tatas join Reliance Communications which has already paid Rs 1,651 crore for GSM spectrum under this policy.

DoT has also cleared a file to provide spectrum to incumbent operators who have been waiting from December 2006. This includes Idea Cellular and Vodafone Essar amongst others.

The rush to pay licence fees, which led to a long queue and heated arguments, was a result of a clause that spectrum would be allotted on the basis of whoever pays the licence fee earlier.

Meanwhile, as many as five applicants "" HFCL, Parsvnath, Allianz Infratech, Bycell Telecom and Selene Infrastructure "" were rejected.

"We will wait for an official communication before deciding on the future course of action," said a promoter of another company that was rejected.

In the case of HFCL, DoT refused to add the net worth of its partners IDBI to meet the mandatory net worth criterion.

HFCL chairman Mahendra Nahata was pushed out of the premises. Nahata, it is learnt, plans to lodge a complaint, while some of the other rejected applicants hinted at taking legal recourse.

A UAS licence allows an operator to offer fixed line, mobile, Internet telephony and broadband Internet access. The operator can use either GSM or CDMA technology for mobile services.

Licences issued today are part of the first phase of applicants who had queued up till September 25. The department has promised to take up another 24-odd applications at a later unspecified date.