Telcos strongly oppose Rs 23,000 crore bailout for BSNL, MTNL
12:04PM Wed 30 Jan, 2013
NEW DELHI: All private mobile phone operators companies have strongly opposed the telecom department's move to approach the union cabinet seeking a Rs 23,000 crore bailout for BSNL and MTNL.
ET recently reported that the telecom department (DoT) had sought cabinet approval for the centre to bear the one-time spectrum fee for state-owned telcos and also refund part of the 4G airwaves costs of these companies as they had surrendered this spectrum last year citing lack of a business case.
In a rare show of unity, industry bodies representing both GSM and CDMA operators in a joint letter to the telecom minister Kapil Sibal said 'consideration of any such proposal was not permissible as it would be in contravention of all tenets of policy, fair competition and level playing field', while adding that under current rules 'assures all level playing field for all operators'.
"It is submitted that if BSNL/MTNL are given any refunds or financial aid, this will give a huge pricing advantage to public sector companies over private operators and create a price distortion which will be both discriminatory and anti-competitive. DoT decision to waive this one-time charge for PSUs would clearly establish that the government agrees that imposition of this charge is legally not valid and this charge cannot be levied on existing private licensees also," the Cellular Operators Association of India (COAI), the industry body representing GSM operators, and the Association of Unified Service Providers of India (AUSPI), the lobby for CDMA and dual technology operators, said in a January 29 letter to Sibal.
Last month, the cabinet had approved the recommendation of a panel of ministers to impose a one-time fee on mobile phone companies, both prospectively and retrospectively, for the airwaves they currently hold. This charge came into effect from January 1, and the DoT has given telcos the option of paying a third of it upfront and the rest in equal installments based on the validity of their licences. The department has told the cabinet that these loss-making and debt stricken state-owned telcos are not in a position to shell out nearly Rs 12,000 crore towards this charge. The DoT's Cabinet note had further added that BSNL surrendered 4G spectrum in six regions and was entitled to a refund of Rs 6,725 crore, while the corresponding figure for MTNL was Rs 4534 crore.
The two industry lobbies, in their communication to Sibal, also pointed out that an earlier decision by the government to give preference to the state-owned telcos had been criticized by the court. This relates to the telecom tribunal's judgment in March 2009, when it directed the government to withdraw additional airwaves given to state-owned telcos and said there was 'no rationale for treating the PSUs differently'.
Private operators have also slammed the telecom department's justification that the financial support was being sought as the state-owned telcos serve the government's social agenda. They have said that the argument may have some merit in the case of BSNL's fixed line services, which has always been subsidised, earlier in the form of access deficit charge (ADC) and now from the universal service obligation fund where a further subsidy of around Rs 2,700 crores was being considered.
"In case of wireless services, the facts are contrary as they show that it is the private operators rather than BSNL who are significantly and aggressively serving the social agenda and the rural market. Based on facts and data published by sector regulator Trai, it is evident that BSNL is the fourth largest mobile operator in rural India after Airtel, Vodafone and IDEA."
"It is thus submitted that if serving the rural or social agenda is the criteria, then it is the private operators, who are contributing or meeting the social objectives rather than the PSU operators; thus BSNL cannot be given support for an objective that it is not meeting or serving," the communication of both industry lobbies added.
BSNL, which offers services in all regions except Mumbai & Delhi had registered a loss of Rs 8,851 crore in 2011-12 and MTNL about Rs 4110 during the same period.
TOI
ET recently reported that the telecom department (DoT) had sought cabinet approval for the centre to bear the one-time spectrum fee for state-owned telcos and also refund part of the 4G airwaves costs of these companies as they had surrendered this spectrum last year citing lack of a business case.
In a rare show of unity, industry bodies representing both GSM and CDMA operators in a joint letter to the telecom minister Kapil Sibal said 'consideration of any such proposal was not permissible as it would be in contravention of all tenets of policy, fair competition and level playing field', while adding that under current rules 'assures all level playing field for all operators'.
"It is submitted that if BSNL/MTNL are given any refunds or financial aid, this will give a huge pricing advantage to public sector companies over private operators and create a price distortion which will be both discriminatory and anti-competitive. DoT decision to waive this one-time charge for PSUs would clearly establish that the government agrees that imposition of this charge is legally not valid and this charge cannot be levied on existing private licensees also," the Cellular Operators Association of India (COAI), the industry body representing GSM operators, and the Association of Unified Service Providers of India (AUSPI), the lobby for CDMA and dual technology operators, said in a January 29 letter to Sibal.
Last month, the cabinet had approved the recommendation of a panel of ministers to impose a one-time fee on mobile phone companies, both prospectively and retrospectively, for the airwaves they currently hold. This charge came into effect from January 1, and the DoT has given telcos the option of paying a third of it upfront and the rest in equal installments based on the validity of their licences. The department has told the cabinet that these loss-making and debt stricken state-owned telcos are not in a position to shell out nearly Rs 12,000 crore towards this charge. The DoT's Cabinet note had further added that BSNL surrendered 4G spectrum in six regions and was entitled to a refund of Rs 6,725 crore, while the corresponding figure for MTNL was Rs 4534 crore.
The two industry lobbies, in their communication to Sibal, also pointed out that an earlier decision by the government to give preference to the state-owned telcos had been criticized by the court. This relates to the telecom tribunal's judgment in March 2009, when it directed the government to withdraw additional airwaves given to state-owned telcos and said there was 'no rationale for treating the PSUs differently'.
Private operators have also slammed the telecom department's justification that the financial support was being sought as the state-owned telcos serve the government's social agenda. They have said that the argument may have some merit in the case of BSNL's fixed line services, which has always been subsidised, earlier in the form of access deficit charge (ADC) and now from the universal service obligation fund where a further subsidy of around Rs 2,700 crores was being considered.
"In case of wireless services, the facts are contrary as they show that it is the private operators rather than BSNL who are significantly and aggressively serving the social agenda and the rural market. Based on facts and data published by sector regulator Trai, it is evident that BSNL is the fourth largest mobile operator in rural India after Airtel, Vodafone and IDEA."
"It is thus submitted that if serving the rural or social agenda is the criteria, then it is the private operators, who are contributing or meeting the social objectives rather than the PSU operators; thus BSNL cannot be given support for an objective that it is not meeting or serving," the communication of both industry lobbies added.
BSNL, which offers services in all regions except Mumbai & Delhi had registered a loss of Rs 8,851 crore in 2011-12 and MTNL about Rs 4110 during the same period.
TOI
Photos
