(by Saptarishi Datta & Nikhil Pahwa)
Following the Supreme Court’s cancellation of 122 telecom licenses, there has been uncertainty around what will happen next. We’d reported earlier on what some of the telecom firms said following the verdict, and there was little clarity on what Telenor, which is the largest among the new telcos in terms of subscribers, will do next. 22 licenses of Uninor and three of Tata had been cancelled and a penalty of Rs 5 crore was imposed on each of the companies. Here’s how they’ve reacted:
Telenor: Telenor appears to be pushing for favorable terms in the auctions: Firstly, by threatening to exit India if the base price for spectrum is too high, as per a report in the Hindu Business Line. Sigve Brekke, head of Telenor’s Asian operations wants to limit the auction only to new telecom operators, thereby trying to close the door in potential new entrants, and trying to prevent incumbents, many of whom do not have sufficient spectrum for their existing customer base, for taking part in the auction. LiveMint reports that there is political pressure being put too, which is not surprising, given that Telenor is partly owned by the Norwegian government. Alarmingly, the Mint report quotes Brekke as saying that competitors are sending out communications to Uninors retailers and distributors asking them to get customers to port, claiming that Uninor is dead.
Tata Teleservices: Tata Teleservices has welcomed the acutions, and said that it has been advised to file a review petition in the Supreme Court. The press statements notes that the company had applied for the licenses to operate in Assam, North-East and Jammu and Kashmir in June 2006, long before the infamous allocation in January 2008, and had to wait 18 months before letter of Intent (LOI) was issued. It points out that the licenses allocated to it in 2008 were all CDMA licenses, not GSM licenses, and that Docomo had invested in the GSM business.
The full statement:
Tata Teleservices Limited (TTL) welcomes the Hon’ble Supreme Court’s judgment that spectrum, a scarce national resource, will be allotted through auctions. It has always been our view that spectrum has value and should be paid for.
The aberrations in the policy date back to 2001 and have resulted in wrongful allocations, the beneficiaries of which were not before the Court. If auction covers spectrum wrongfully-allocated since 2001 and is executed in an equitable manner, without bias in favor of selected operators or specific technologies, it should bring in greater transparency and fair-play into the telecom industry.
It is obvious that in the new dispensation mandated by the Supreme Court to be put in place within four months, there has to be a level playing field consistent with the paradigm of transparency.
At the time when NTT DOCOMO invested in TTL, TTL had been in operations for over 12 years, already had 17 licences, had reached an annual turnover of Rs 6,000 crores, had 3,000 employees, about 100 offices, 33 million subscribers, 60,000 km of fiber, an NLD business, 38% investments in Tata Teleservices (Maharashtra) Limited and 100% investments in its tower subsidiary. The clubbing of TTL with two licensees who had just entered the telecom business from the real estate sector appears to have also overlooked this and the fact that only three new licenses were granted to TTL in January 2008, that these were for Assam, North East and Jammu & Kashmir, and most of all, these were CDMA licenses.
The investment made by its strategic partner NTT DOCOMO was, therefore, not on account of these three licences but on account of TTL’s established position as one of the strong players in the telecom field, apart from its strong Tata brand.
TTL had applied for these three licenses way back in June 2006 and this was kept pending for over 18 months until LOIs were finally issued in January 2008.
TTL has been advised to file a Review Petition in the Hon’ble Supreme Court seeking redressal on this point.