TRAI says no separate ‘exit policy’ for telcos wanting to quit

19 Apr 2012 Evaluate

Telecom Regulatory Authority of India (TRAI) reiterated that licence fee will continue to be non-refundable to mobile service providers if they lose or surrender permits, while adding that a separate exit policy was not required for mobile phone companies who wanted to quit the business. TRAI’s commendations will facilitate the government to save about Rs 10,000 crore, which was paid by the 122 licences that were quashed by the Supreme Court in its February 2, 2012 orders.

The regulator’s recommendations, if accepted, will also result in dismissal of requests from companies like Loop, S Tel and Telenor that had demanded repayment of their licence fee from the government. Unitech Wireless or Uninor, majority owned by Norway’s Telenor, has sought a reimbursement of Rs 1,659 crore paid as licence fee to the government when it acquired mobile permits while Loop wants around Rs 3,800 crore back from licence fee and damages.

Many players are willing to exit the telecom space due to stiff competition and lower profits but are unable to do so. They want clear guidelines on mergers and acquisitions (M&As) and exit policy. But, last month, TRAI had said it was not in favour of an exit policy for telcos since the Supreme Court, on February 2, 2012, had already cancelled all 122 telecommunication licenses issued to various operators in India's 22 service areas under the 2G spectrum sale by the government in January 2008 allegedly at very low prices favoring some companies, and thereby causing a loss of Rs 1.76 trillion (as per Comptroller and Auditor General report) to the exchequer.

But prior to the SC’s orders in February 2, the telecom department had asked the regulator to exercise an exit-policy to allow some operators that had not even started operations, and others who wanted to wind down to exit the sector, as it felt that this was a better option compared to canceling the licences, as recommended by TRAI. While the regulator’s recommendations are not binding on the government, TRAI has restated its suggestions from the draft proposal last month, which advises the government to continue with its present rules that allow a Telco to give up permits by giving a notice of 60 days.

In a separate development, the telecoms secretary R Chandrasekhar said the government was awaiting regulations on spectrum auction by TRAI that would give clarity on the next set of steps to be taken. He added that telcos seeking fresh licences need not wait for the National Telecom Policy, slated to be out by June, and could get permits after guidelines for unified licences are finalised by DoT.

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TRAI says no separate ‘exit policy’ for telcos wanting to quit

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