|And then there were 52?|
|Thursday, 12 April 2012 00:56|
Presidential Reference puts 81 more licenses in limbo
Despite Planning Commission Deputy Chairman Montek Singh Ahluwalia's warning, the Cabinet's decision to clear the Presidential Reference on 2G is unfortunate, and threatens to throw the sector into its most serious crisis since 1999. Apart from the 122 licenses that have already been cancelled by the Supreme Court, the telecom ministry-backed Presidential Reference seeks the Court's view on whether another 81 licenses need to be cancelled (there are another 35 'dual technology' licenses as well, but we're not counting these as technically they are not new licenses) on grounds they were not auctioned either—the Court had cancelled the 122 licenses saying they should have been auctioned. Till the Supreme Court decides on the reference, and depending on what it decides, this means the fortunes of most telcos remain in limbo. And, along with them, the fate of banks who've lent tens of thousands of crore to these telcos on the basis of the assurance that the licenses were kosher. And since the Presidential Reference goes all the way back to 1994 when the first cellular licenses were issued on the basis of a 'beauty parade' (the government laid out financial/technical criterion and companies were given scores on this), unravelling the billions of dollars of third party interests that will have been created in the last 18 years will pose a challenge that is difficult to even comprehend.
India has issued a total of 280 fixed/mobile licenses, of which 122 have already been cancelled. The Presidential Reference seeks to get the Court's view on another 81, leaving 77 licenses unchallenged. Since the state-owned MTNL/BSNL got 25 licenses without any auction, presumably these can be challenged as well, leaving just 52 clean licenses!
Though the Presidential Reference suggests the government wants clarity on telecom licenses after the Court cancelled 122 licenses, as Ahluwalia has pointed out, the other licenses have not been challenged, so this is just creating a crisis for no apparent reason. Also, apart from the fact that the Reference adds to the confusion by incorrectly suggesting India never had telecom auctions till the 3G ones in 2010, it does not take into account that the courts have cleared several of these licenses in the past. The 21 UASL licenses issued in 2001, for instance, were challenged by the Cellular Operators Association of India and, when COAI withdrew its suit, the matter was dismissed as withdrawn on January 13, 2004. The 8 metro licenses, in 1994, were also the subject of a court case which was settled. Till the Supreme Court gives it ruling on the matter, the industry will remain in a state of suspended animation.