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Cellular Operators Association of India says spectrum refund to state telcos a bad call

Saturday, 11 January 2014 - 12:37pm IST | Place: Mumbai | Agency: DNA

Private telecom companies have opposed the government decision to refund of Rs 11,258 crore to state players, BSNL and MTNL, for surrender of their 4G spectrum, saying it was bad precedent and other telecom firms too may make such demands.

Rajan Matthews, director general, Cellular Operators Association of India (COAI) told dna, “The government is setting a bad precedent for other telcos to follow by refunding spectrum fees, which is not allowed – there are penalties in the notice inviting applications bid document regarding this.
Other telcos may also now ask for a refund of spectrum they are not using or if they see a bad business case.”

COAI plans to write a letter to the government in this regard.

BSNL and MTNL, which paid Rs 8,314 crore and Rs 4,534 crore, respectively for spectrum in the 2.5 GHz band in 2010, were lobbying with the government for a refund of the spectrum which they proposed to surrender, having not rolled out 4G.

However, given that the government has now made provision for 4G rollout in any spectrum band, other BWA spectrum holders may also seek to surrender their spectrum, especially given that the deadline for 4G rollout is barely a year away.

Another bone of contention is that both the public sector undertakings were given BWA spectrum three years before other telcos – which means they held free BWA spectrum from 2007 to 2010.
Now, with refund given only to these two telcos, it represents a significant loss to the ex-chequer, he said.

Coming at a time when the government is putting in place stringent norms for private telcos related to reserve price, spectrum usage charge, license fees and retrospective pricing for spectrum held beyond 4.4. MHz, COAI feels that this selective preference to BSNL and MTNL contradicts the government’s aim to recover pending costs from telcos, as there has been no value creation for the PSUs’ 4G spectrum lying idle since the last six years.

It also conflicts with the government’s aim to accrue over Rs 40,000 crore from the next auction -- as even if BSNL and MTNL’s 4G spectrum is auctioned it may see negligible or few takers.

Last December, Tata Teleservices Ltd also surrendered 20 MHz of CDMA spectrum above 2.5 MHz in all circles, except Mumbai and Delhi.

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