Six new telcos to be fined for missing rollout deadline
- NEW DELHI: The telecom department is finalising the quantum of penalty for delayed rollout of services by new players in the telecom market, an official with direct knowledge of the matter said. The latest entrants include Videocon, Sistema, Uninor, Loop, S Tel and Etisalat DB. Aircel Cellular that got licences for some circles before 2008 may also be penalised for delays.
India’s telecom regulations mandate that any company with a licence must meet deadlines for commercial launch of services. These six mobile phone companies, which bagged licenses in January 2008, have missed several deadlines for launching commercial services, the Department of Telecom (DoT) official said. DoT has powers to cancel licences of mobile phone companies in circles where they have not launched services even a year after getting the licence.
At the same time, as reported by ET on Monday, DoT is examining proposals that will allow many of these new mobile operators, to sell out or exit, paving the way for a possible consolidation in the 14-player market.
Some of the new entrants refused to comment on the development. Etisalat DB promoter Shahid Usamn Balwa said the ‘company had fulfilled all its rollout obligations and hence the penalty would not apply to them’. An executive with another new entrant explained that DoT had the powers to impose financial penalties for delayed launches.
An executive close to Uninor said the company had 22,000 telecom towers across the country as it had executed commercial agreements with infrastructure companies. “Technically, Uninor has completed rollouts in all 22 circles — the deals with tower companies shows its intent,” he said.
DoT is consulting the finance ministry to impose penalties on similar lines on older players who got licenses before 2008 and had delayed launching services. This is because, there have been recent changes in the calculation method.
The Central Vigilance Commission is probing the reasons why all new entrants barring Sistema Shyam have delayed rollouts. The prime office has asked the department of telecom for an explanation.
Even after almost three years, Etisalat DB has not yet started full-fledged commercial services, while Loop Mobile offers services only in Mumbai. Etisalat and Loop say they have ‘technical launches’ in several circles. These are not full-fledged commercial services and analysts say they are token launches to meet rollout obligations. Videocon has launched mobile services in only five of the 22 circles. S Tel offers mobile services in all its six circles, but overshot the deadline. Uninor, owned by Norway’s Telenor, has missed deadlines in half its circles.
Existing laws mandate mobile companies to provide commercial services in at least 10% of the district headquarters by the end of the first year. DoT can fine mobile phone companies Rs 5 lakh a week per circle for the first 13 weeks of delay. The fine then increases to Rs 10 lakh each for the next 13 weeks followed by Rs 20 lakh for delays up to 26 weeks.
The maximum amount of time an operator can sit on the licence, which comes bundled with airwaves, the radio frequencies, on which all mobile operators travel, is 12 months.
“The licenses of these operators must be taken back and penalties must also be imposed for squatting on spectrum, as these airwaves are a national resource. If the same airwaves have been allotted to existing operators, the government would have earned revenues on them — the new entrants must be made to compensate this revenue loss,” said BK Syngal, senior principal at Dua Consulting.
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