DoT unlikely to cancel telcos' licences

Imposition of stiff penalty on new operators which were issued 2G spectrum licences without following the procedures and eligibility conditions during the tenure of communications minister A Raja seems to be one of the key solutions the Department of Telecommunications(DoT) is considering in case investigative agencies can prove charges against the former minister.

Top DoT sources said the department was unlikely to go for cancellation of licences, as many of the new operators already had made large investments and had a reasonable presence across the country.

The new licensees have invested over Rs 17,000 crore (Rs 170 billion) on their network. "Even in cases of failure to meet the roll-out obligation in the stipulated timeframe and the penalty period and Trai's recommendation of cancellation, the solution has been penalty. Though under the unified service access licence, we can cancel the licences," said a DoT official.

The official added any cancellation would have international repercussions, as many leading foreign telecom companies had bought controlling equities in new operators like Telenor and Etisalat.

The Comptroller and Auditor General of India (CAG) has already stated various discrepancies in issuing licences to operators like Unitech, Datacom, Loop and Etisalat-DB among others.

The government can cancel the UAS licences in case it is found the licences were given without following procedures or with the intention of favouring some operator.

Even under the terms of licences, DoT has the power to cancel the licences if roll-out obligations are not met (there is a grace period in which you can pay penalty) or if it is in the name of "public good".

In 2002, DoT had cancelled the licence of Koshika Telecom, which was authorised to operate in four circles, due to non-payment of licence fees.

At that time, DoT had stated that as there were other operators in the circle and customers had a choice, they would face no problem in shifting.

The top six new operators account for only 5 per cent of the total GSM subscriber base of 543 million, and three of them do not have even one per cent share of the base.

Only Uninor, a joint venture between Unitech and Telenor of Norway, has a larger subscriber base of over 18 million. But it has a larger incremental share of new users.