Can we have our 2G license fee refunds please?

Business

oi-Sunil

By Sunil Fernandes

Published: Wednesday, May 2, 2012, 14:26 [IST]

In early February 2012, the Honourable Supreme Court revoked 122 licences granted to telecom operators including Uninor, Videocon, Etisalat DB, Sistema Shyam Teleservices and Loop Telecom, who planned to commence 2G operations.

The Honourable Supreme Court was right in pointing out that the 2G licences awarded were in an arbitrary and unconstitutional manner.

Now, most of the companies are likely to lose the Rs 1650 crores paid in licence fees, as the Telecom Regulatory Authority of India has said that the existing policy of non refundable license fee should continue.

It has ruled out a new exit policy which means that it has ruled out a virtual refund of the license fee for the 122 licences cancelled by the Honourable Supreme Court. Forget the license fee, the companies listed above have made sizeable investments in the form of infrastructure and other facilities and license is just a part of that. Reports reveal that Uninor has pumped in more than $3 billion, while Sistema Shyam has invested $2.5 billion.

Companies whose licenses are cancelled cannot be penalized for following government procedure at each stage of the allocation process; they cannot be penalized for believing that the Indian telecom sector held great promise; they cannot be penalized because Raja wanted to allocate spectrum on “a first come first serve basis”, rather than an auction.

There is a strong case for refunding of license fee and if the government does not, it is exhibiting a hostile attitude to foreign investors, who have made some sizeable investments in the sector.
These include big foreign monoliths like Telenor of Norway, Vodafone of UK, Russia’s AFK Sistema, Japan’s NTT DoCoMo and Etisalat of UAE.

In fact, the Norwegian government has now got involved in trying to protect Telenor's investment in India. Reports suggest that Etisalat will close its India operations and so will Bahrain Telecom.

The government must not remain hostile to foreign investors, given our precarious current account deficit and a fast depreciating currency.

The TRAI is bound to adopt stringent measures given that screws have been tightened after the 2G scam and is unlikely to relent on refunds. The government might need to intervene and telecom companies cannot be made scapegoats.

Dwight D. Eisenhower was right when he said, “The search for a scapegoat is the easiest of all hunting expeditions.” The telecom companies that have lost their licences may well agree with Eisenhower.

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