By Rishi Raj and Sunil Jain
The nine companies whose licences were cancelled by the Supreme Court last week are in for a disappointment if they are looking at some form of compensation from the government for the investments made by them so far. The Telecom Regulatory Authority of India (Trai), which is working on recommendations on the exit policy as asked by the government, is likely to keep quiet on the issue of compensation – the exit policy will deal with issues like returning of spectrum if a company exits early (not being asked to leave by the court) and refund of licence fees.
Sources said that the line of no compensation is in sync with the Trai's overall stand on the issue. Before the SC cancelled the 122 licences, it had in November 2010 recommended that 74 of them be cancelled because they had failed to meet their rollout obligations. Two of the companies which got licences in January 2008 from former telecom minister A Raja where foreign investments had come are Swan and Unitech Wireless with Etisalat and Telenor picking up stakes in them. The Trai had recommended that all of 15 licences of Swan be cancelled while 8 of the 22 licences of Unitech Wireless (Uninor) be scrapped.
When contacted, Trai chairman JS Sarma declined to comment stating, “We are still working on the issue and it is not possible to comment.”
Norway's Telenor, with a controlling 67.25% stake in Uninor, so far has been most vocal in demanding safeguarding its R14,000 crore investments made in the country. Its IT minister met telecom minister Kapil Sibal on Tuesday.
Meanwhile, Trai will come out with a consultation paper on the modalities of auctioning around 417 MHz of spectrum, which would be available with the cancellation of the 122 licences. It has already come out with a pre-consultation paper on the subject last week.
Sources said the main issue before the Trai would be fixing the reserve price so that adequate revenues come to the government. The problem of fixing a reserve price has surfaced because the availability of spectrum is expected to be much higher than demand. The regulator fears that in fresh auctions, all new players whose licences have been cancelled will not participate, thus depressing demand for spectrum.
Though there has been demands by Telenor that the auctions be confined to new operators and not incumbents, Trai is still considering whether it would be feasible to have two separate blocks of auctions – one for new players followed by the other for incumbents. “The problem would be the same – whether there would be enough players so that the price of spectrum can be discovered through auctions,” Trai sources said.
While submitting its recommendations of auction of 2G spectrum, the Trai this time would specifically ask the government to clarify on issues relating to its terms and conditions and usage. “We would clarify whether the spectrum obtained through can be traded and shared or not. The idea is that an investor should be clear what he's getting into and what all can he do with the spectrum,” sources said. This has assumed importance because in the 3G spectrum auctions, the government had clarified that operators can forge alliances for intra-circle roaming but when Bharti, Idea, Vodafone, Tata Tele and Aircel started doing it, the department of telecommunications categorised it as illegal. The matter is currently before the Telecom Dispute Settlement and Appellate Tribunal.
Sarma declined to comment on these issues, stating “all approaches would be examined and it's too early to comment on specifics.”