The department of telecommunications (DoT) plans to hold the fourth round of bidding for seven basic telecom circles in June. The minimum reserve price for the circles are likely to be scaled down significantly maybe as much as 50 per cent of the levy set in the last round of bidding in May last year.
The eight circles that will come up for bidding are: Uttar Pradesh (east), West Bengal, Kerala, Assam, North-East, Jammu & Kashmir and the Andaman & Nicobar Islands. DoT sources said they wanted to conclude the fourth round of bidding for provision of basic telecom services in the circles as fast as possible to supplement telecom development in the circles.
The sources hinted that this round may be the last round of bidding for private bidders to enter the basic telecom services arena. Since the reserve price is being reduced substantially, we might stipulate that we reserve the right to decide on future methodology of awarding these licences, one official explained.
This is being interpreted by private telecom industry sources as an indication that DoT might allow public sector units like the proposed joint venture between Mahanagar Telephone Nigam Ltd (MTNL, the fixed-line services provider in Delhi and Mumbai) and Telecom Consultants India Ltd (TCIL, a turnkey unit offering services primarily outside the country) to start basic telecom networks in the circles without private providers.
The department might also itself forge a joint venture with WorldTel, a telecom finance institution promoted by the International Telecommunication Union. WorldTel is headed by Sam Pitroda, formerly the chairperson of the Telecom Commission, the nine-member apex body of DoT and has sent a proposal to start basic telecom services in three circles: Uttar Pradesh (East), West Bengal and Kerala.
Over the past three rounds of bidding the first one was in June 1995 and the last in May last year DoT has issued licences or letters of intent (LoIs) for 13 circles in the country. In the first round, the companies which bagged the LoIs included Himachal Futuristic Communications Ltd (HFCL, for Delhi, Uttar Pradesh (West), Haryana and Orissa), Hughes Ispat (Maharashtra and Karnataka) and Shyam Telecom-promoted Telelink Networks (Rajasthan).
In the second round, the companies which were awarded LoIs were: Tata Teleservices (Andhra Pradesh), Reliance Telecom (Gujarat), Essar Commvision (Punjab), Usha groups Techno Telecom (Bihar) and RPGs Basic Teleservices (Tamil Nadu).
The third round of bidding had a poor response with only Bharti Telenet bidding for Madhya Pradesh successfully.
Of the nine companies which have received LoIs, only six Bharti Telenet, Reliance Telecom, Hughes Ispat, Tata Teleservices, Essar Commvision and Telelink Networks have signed licence agreements with DoT. The department is yet to file a review petition on a Delhi High Court judgement favouring HFCL, when the former sought to encash the companys bank guarantee.
The six firms which have not concluded licence agreement with DoT are Techno Telecom, Basic Teleservices and Hughes Ispat (for Karnataka). Techno Telecom is likely to work for an out-of-court settlement with DoT, while Basic Teleservices is yet to resolve a case being heard in the Delhi High Court. Hughes Ispat is also yet to sign the licence agreement with the department for Karnataka.
