The Telegraph
Since 1st March, 1999
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Reliance Info told to shell out Rs 1581 crore

New Delhi, Oct 27: Reliance Infocomm will have to stump up Rs 1,581 crore to migrate to the unified licensing regime.

The sum comprises two components: Rs 1,096 crore on account of the difference between the fourth cellular operators’ licence fee and the entry fee they paid for the basic licence and Rs 485 crore as penal interest for flouting the conditions of its existing licence.

However, the company is not happy with the penalty of Rs 485 crore levied on it for offering network services almost like an unlimited mobility service by using techniques such as multiple registration and call-forwarding.

The telecom regulator said if Reliance chose to remain a limited mobile operator restricting its service within the short distance charging area, it would have to pay only Rs 221.04 crore.

Sources in Reliance Infocomm said, “We will pay the entry fee under the unified licensing regime as and when the group of ministers decides on it. The company would, however, like to challenge the penalty levied on us since it was never mentioned by the Telecom Regulatory Authority of India (Trai) when we had sought to offer the service.”

The penal interest has been computed on the basis of one of the licence conditions for cellular operators. Under this, a payment default attracts a penal interest of 5 per cent above the prime lending rate (PLR) of the State Bank of India (SBI). The current PLR of SBI is 10.5 per cent.

Corporate observers said the levy of the penal interest would push back the deadline for Reliance Infocomm’s breakeven by another year.

Early this month, Anil Ambani, vice-chairman and managing director of Reliance Industries, had announced that Reliance Infocomm would achieve breakeven by the next financial year.

While unveiling the blueprint for the unified licensing regime, Trai chairman Pradeep Baijal said, “Trai considers that Reliance Infocomm, one of the basic service operators (BSO), has been offering services almost like an unlimited mobility service by using techniques such as multiple registration and call forwarding.

“Hence, the company should pay a penal interest as per the conditions laid down in the cellular mobile service agreement from the date of signing their existing BSO agreement till the date of migration to the unified access licensing regime, as applicable to the delayed payments of cellular mobile service provider’s (CMSP) licence fee and other dues.”

The regulator recommended that for unified access licence, Reliance Infocomm should pay an entry fee paid by the fourth cellular mobile, minus the amount paid by BSO as entry fee, plus an amount which would be similar to delayed payments of CMSPs’ licence fee.

A Reliance spokesperson said, “Reliance Infocomm welcomes the recommendations of Trai ending the licence raj in the telecom sector. Reliance Infocomm will abide with all the decisions of the Centre in this regard to ensure uninterrupted high quality next-generation mobile telephony service to its 5 million customers.” Trai estimated that the Tatas will have to pay Rs 545 crore as migratory fee and Bharti will have to fork out Rs 487 crore.

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