HEADLINES
JOBS
COM:PORT
POLICY POLICE
ARCHIVES

Wrong numbers

Cell phone operators are still flunking math.
And a worried DoT has set up a study group

One reason these firms are under watch is that they are the ones who, in an

T O D A Y

• Wrong numbers • Alcatel park in Madras • IVL to go global • Isocor coming

already struggling industry, owe the government the most in licence fees. The DoT claims this is just a prelude and that a more comprehensive study of the industry's financial situation will soon follow.

This, DoT sources said, was part of an effort to see if the industry really is in as much trouble as the operators claim. And if such claims are verified, the government may consider providing some immediate assistance.

The companies were to pay the licence fees in instalments over a ten-year period. Most of them were just into their third year, but they yet have to hand in several instalments.

JT Mobile, operating in Andhra Pradesh, Karnataka and Punjab owes the government Rs 32.36 billion over 10 years; Fascel, which covers Gujarat, owes Rs 12.29 billion over the same period; Aircel Digilink, with licences for Haryana, Rajasthan and east Uttar Pradesh, owes Rs 7.6 billion; and Koshika Telecom, with stakes in Bihar, Orissa and east Uttar Pradesh, has to pay Rs 8.43 billion.

While none of the operators has announced financial closure, Fascel, which last year had promised the DoT back-ended payment of the second year's licence fee, has now admitted it can't cough up, partly because it has not yet tied up its funds.

Financial institutions, meanwhile, say that the poor returns from the industry, due to poor subscriber revenues and low air-time usage, make financing unviable. Unless, of course, the government offer some sops, like a two-year moratorium on licence fee payment for the third and fourth years, and an extension of the licence period by five years.

But there are other problems too. Koshika Telecom, whose promoters are wrangling in court, has not been able to raise funds either through equity or borrowings. With a paid-up equity of just Rs. 2,000, it has raised a loan of Rs 1.7 billion from the Usha Group (one of the promoters) besides vendor credit from Alcatel to the tune of approximately Rs 3.9 billion.

Alcatel has also taken a minority equity stake -- worth Rs 225 million -- through fully convertible debentures. Against this, the company has projected a project cost of Rs. 12 billion over three years.

JT Mobile is also in court over disputed equity but the problem is likely to be resolved soon. That, as well as the sale of FCDs to Essar in the Punjab circle, transferred thereafter to a JTM subsidiary, has held up the disbursement about Rs. 3.5 billion in loan from the Industrial Development Bank of India. JTM has pegged the project cost at Rs 7.02 billion.

The demands for concessions prompted the DoT to seek help from a third party, in this case the BICP. But the first phase of the study was nearly done, Telecom Commission chairman A V Gokak has said, and all projects are being reviewed.

The industry is looking forward to concessions to the whole industry though the government's current focus on the weaker companies suggest it may give them out only to companies that need it. Some companies, like Birla AT&T and Escotel, have paid up regularly and such companies may actually lose out for their promptness in payment.

- Compiled from the Indian media

Tell us what you think of this story