RAINING MONEY

New Delhi, Nov. 18: The department of telecom (DoT) expects at least six companies to pay the licence fee to offer cellular services on a pan-India basis.

Forty-six companies have submitted 575 applications in response to the latest offer from the DoT to provide cellular services, of which only 20 companies want to operate across India.

According to DoT officials, the department expects at least six of the 20 pan-India applicants to convert their letters of intent (LoI) into licences.

Each of them will pay Rs 1,650 crore as the licence fee, jacking up the DoT’s revenues by around Rs 10,000 crore.

Though the DoT is giving the letters of intent to all applicants, it expects only a few to convert the letters into actual licences, given the high initial fee being charged without any guarantee of spectrum.

The companies that are expected to buy the pan-India licences include domestic and foreign players, such as AT&T, Spice, HFCL, DLF, Parsvnath and BPL Mumbai.

“The process of issuing the letters is being looked into within the department and a decision will be taken soon,” the officials said.

The six new entrants will invest at least Rs 60,000 crore in two years to start all-India operations, they said.

Smaller players, who are seeking licences in a few circles, will also invest substantial sums.

Officials said the new telecom licence holders would get spectrum only after existing mobile operators and firms with licences but no spectrum get their allotments.

Operators have no objections to this policy, but some want the process to be over quickly.

In a letter to the DoT, Modi group-promoted Spice Telecom said, “Our focus area is the issuance of LoI to us with respect to our application submitted in August 2006 for 20 telecom circles.”

Shyam Telecom, Himachal Futuristic Communications Ltd and a few other applicants who will benefit from the first come, first served spectrum allocation policy want the government to speed up the exercise.

GSM protest

The move puts the government in a fix as existing GSM operators have contested the DoT’s move to issue the letters without guaranteeing spectrum.

In a letter to telecom secretary D.S. Mathur, the Cellular Operators Association of India (COAI) has warned that any proposal to issue the letters to all prospective licencees will hamper investor confidence.

“This will be absolutely incorrect, arbitrary, illegal and untenable for the government to collect non-refundable fee of Rs 1,650 crore from a licensee applicant and give no guarantee for spectrum, which is the resource that the applicant is actually paying for,” COAI director general T.V. Ramachandran said in the letter.