Cellular and basic telecom operators are disappointed with the government, used as they are to the mollycoddling by the previous United Front coalition.
Beginning with a quick change at the helm of the department of telecommunications (DoT) to alleged attempts of some companies to explore the seedier path of corruption in getting the government to give into their demands, it's been an eventful 100 days.
Unfortunately for the cellular industry, which claims to be making cash losses of more than Rs 400 crore a month, the government is yet to take a final decision on its demands for an extension of the 10-year licence tenure and a two-year moratorium on payment of licence fees.
Says Sushma Swaraj, minister for communications and information and broadcasting, "We will take a decision after the Bureau of Industrial Costs and Prices submits its report (on the extent of losses being made by the cellular operators)."
That could take up to six months with operators viewing it as a muddling exercise. They feel that the bureau does not have the necessary skills for the job and will only prolong matters.
On the other hand, they reckon the government should just follow a report by ICICI on the losses being toted up the industry. The report suggests that the government should consider extending the licence period and the licence fee moratorium.
To this, the government's response has been that ICICI is an "interested party" in that it has an exposure in cellular projects and would want to reduce its risk by lobbying for concessions. The companies' reticence in sharing audited financial data with DoT has also irked several officials in the government.
What seems to have really put paid to expectations of cellular operators is the March equity sale in Hucthison Max, the Mumbai cellular operator. Analjit Singh, promoter of Max India, the Indian partner in Hutchison Max, sold 41 per cent equity in the company at a whopping Rs 563 crore, reflecting the healthy future revenue streams of the licence.
The set the tone of reasoning within the government: if the value of a cellular company is so high, why should they be clamouring for concessions at all? Reports of similar other sales did not help: the Ruias of the Essar group sold out to foreign partner Swisscom at five times the face value, Sanmar Electronics placed equity with Pergrine's AIF at Rs 25 a share, and the Hindujas sold equity in Fascel, the Gujarat cellular operator, at a reported premium of Rs 6 a share.
The conclusion: concessions will only help Indian promoters to make a quick buck by selling out.
For the telecom industry,the critical issue that the government needs to make up its mind about is whether the operators are sitting on huge future profits or are the equity sales in Hutchison Max and other companies merely lemons?
