Govt approves licences to 9 telecom firms | india | Hindustan Times
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Govt approves licences to 9 telecom firms

Move likely to trigger new price war in 22 telecom circles as companies launch new services, reports Arun Kumar.

india Updated: Feb 26, 2008 21:26 IST
Arun Kumar

The government approved on Tuesday telecom licences to 9 companies that were issued letters of intent (LoIs) on January 10.

Telecom Minister A Raja has cleared the file and is expected to hand out the licences in the next couple of days.

The move is expected to set the ball rolling for a fresh price war in telecom circles with more than a half a dozen companies launching new mobile services in each of the 22 circles in the next 6 months.

While the government issued 120 licences to aspirants, Reliance Communications has already received a pan-India GSM licence.

Industry experts feel that in the initial phase the entry of such a large number of players in each of the circles would bring down mobile tariffs by at least 50 per cent within 6-12 months of their beginning services. Over the long run, Raja expects mobile tariffs to come down to just 25 paise a minute for local calls.

Apprehending the stiff competition, some of the companies have, meanwhile, approached telecom tribunal TDSAT and the Delhi High Court to stall the process, although neither has stayed it. The 9 companies include realty major Unitech Developers, Shyam Telelink and a 26:74 joint venture between Shyam Telecom and Russian major Sistema, Data Com a joint venture between Videocon and HFCL, Swan Telecom, S Tel, Spice Telecom and Idea Cellular, among others, have all received licences. Some are for pan-India, while some are in limited circles.

All of them were issued LoIs on January 10 and had deposited the requisite licence fee on the same day to retain seniority on the spectrum applicants' queue.

“Once the licences are issued physically, we will apply for the spectrum to the wireless planning and coordination wings of the department of telecom (DoT),” said the managing director of one of the new entrants that received pan-Indian licences.

Sources said that barring four circles – Delhi, Rajasthan, Uttar Pradesh and Punjab – these players would be given spectrum in all these circles.

“The government has informed them that the spectrum in these 4 circles would be allotted only after the defence ministry issues fresh spectrum. Initially, they would be issue trial spectrum so as to set up the infrastructure,” sources said.

After receiving the licences, almost all these companies are expected to rope in a telecom major as a joint venture partner.

“We are in talks with some of the leading players and expected to close the deal in the next couple of months,” said a promoter. Companies such AT&T, which has applied for telecom licences in a joint venture with Mahindra & Mahindra but has not receive the LoI, are expected to joined hands with some of these players.