Telecom players still in a tizzy

The Supreme Court’s ruling upholding the auction route for allocation of airwaves may have cleared an overhang on the government but has done precious little to address other issues nagging the sector, feel experts.

“Auctions maximise revenues and it is the best way to ensure transparency. However, if auctions are being conducted, then the government should rationalise the other fees and taxes, as is the case in other countries, where post an auction, operators only pay administrative fees.

However, for the clarity required on the other questions, another EGoM may be needed to deliberate on the same. Interested parties can then decide whether to challenge the same in a court of law or approach the TDSAT,” said Rajan Matthews, director general, Cellular Operators Association of India.

Besides, there are several questions the apex court has left unanswered — questions like whether all the licences issued since 1994 without auction should be cancelled; whether the government should cancel permits given to dual technology players as well; whether the government should withdraw 3G spectrum given to operators whose licences have been cancelled; and how the government should respond to claims of compensation from foreign investors who have been impacted by the apex court’s decision to cancel 122 licences.

Also, while the court has said that revenue maximisation should not be the sole objective of the government, “the telecom sector is not given this benefit,” said Hemant Joshi, partner, Deloitte Haskins and Sells.

“Telecom should be viewed as a strategic industry as it enables growth and promotes financial & rural inclusion. The high reserve price for 2G spectrum set by the government has further added to the uncertainty in the telecom industry and is likely to add to the financial problems of telecom sector after the auction,” said Joshi.

But Mahesh Uppal, director, ComFirst (India), a firm dealing with regulatory affairs says, the apex court has rightly desisted from addressing the other issues and left them to the government. “The particular article in the Constitution under which the Presidential Reference was filed implies no obligation on the SC to respond. The question it has answered will dispel some of the uncertainty in the telecom sector.”

Matthews concurred. The empowered group of ministers (EGoM) scheduled to meet in the first week of October to decide the licence fee for incumbent operators was also awaiting clarity from the Presidential Reference, he pointed out, adding, “With this decision, the EGoM due in the first week of October has clarity to go ahead with its decision, and there is no further room for indecisiveness.”

The government now hopes to complete the auction sometime in November-December, telecom minister Kapil Sibal said.