Government feels cancellation of licences could affect telecom sector

As cancellation of 2G licences, obtained by operators at highly undervalued prices of spectrum in 2008, could have a negative impact on the growth of telecom sector, the government is working on a formula aimed at compensating the exchequer that suffered a “presumptive loss” of over Rs.1.76 lakh crore (based on 3G spectrum prices) from the entire scam.

The Ministry of Communications and Information and Technology feels cancellation of licences of the erring operators could lead to litigations and spoil the economic environment in the country. The government, however, may ask these operators to pay an additional amount for spectrum to compensate for the massive loss to the public exchequer.

“We are closely reviewing the entire issue … cancellation of licences cannot be a viable step forward as it would not only affect the high revenue-generating telecom industry, but also hit foreign direct investment, as leading global players have invested hugely in the Indian telecom sector. Similarly, cancellation of licences would also hit the subscribers as well as the operators who had set up their infrastructure … we cannot stop telecom services,” a senior government official said.

“We will have to find some middle path … we are working on it. If the public exchequer has lost due to under-pricing of spectrum, there should be ways to compensate for it. We have already seen operators paying huge amount to acquire 3G spectrum earlier this year … there were some private operators who were ready to shell out more money for spectrum in 2007,” the official said.

The companies which benefited in 2008 paid just Rs.1,658 crore (based on the 2001 spectrum prices) for pan-India licence.

Similarly, on the TRAI's latest recommendations seeking cancellation of 69 licences of operators who have failed to meet the network roll-out obligations, it is learnt that the new Communications Minister Kapil Sibal has asked the DoT to prepare a detailed note .

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