The department of telecommunications (DoT) has asked the Industrial Credit and Investment Corporation of India (ICICI) to undertake a study on the financial viability of operations of cellular service providers in the country.
The recommendations of the study will form the basis for DoTs decision on whether to accede to a demand by the cellular operators for a two-year moratorium on payment of licence fees and extension of the licence period from 10 to 15 years.
The mandate for the study was earlier with the Bureau of Industrial Costs and Prices (BICP). Sources said that the decision to ask ICICI to study the costs of the cellular industry was prompted by the slow progress of BICP in completing the study. ICICI is expected to finish the study in a few weeks.
The bureau was asked to conduct a study on the cellular industry in January this year. DoT and the cellular industry had expected the BICP to complete its study by April.
Now, it (BICP) wants more information and we feel that they may take too much time before coming out with the study, a source said.
ICICI, on the other hand, they added, was familiar with the telecom industry. In 1994, the telecom advisory group of the financial institution had submitted a study to DoT on recommendations for reforms in the telecom sector. ICICI has also been active in appraising telecom projects with the intention of lending funds. It has the lead mandate for six cellular projects and two basic telecom projects.
Earlier this year, at a meeting of heads of government infrastructure departments and ministries, finance ministry and FI officials in Delhi to discuss the issue of financing infrastructure, ICICI had made a strong pitch for a two-year moratorium for payment of licence fees and extension of licence period from ten to 15 years.
It had also recommended against the entry of Mahanagar Telephone Nigam Ltd (MTNL) into cellular services in Delhi and Mumbai. The telecom PSUs plans to provide cellular services in the two cities have been put on the backburner after the telecom regulatory authority of India ruled against it.
