Move to corporatise DoT evokes mixed reactions

NEW DELHI, SEPT. 2. The series of decisions taken on the telecom front by the Union Cabinet received mixed reactions. The apex industry associations came out in strong support of the decision to corporatise the Department of Telecommunications and permit 100 per cent foreign direct investment (FDI) for internet service providers. They also hailed the TRAI's recommendations for allowing unfettered competition in basic telephony.

However, multinational telecom companies regretted the Union Cabinet's decision to retain FDI in several crucial telecom segments such as cellular, basic and VSAT. As expected, the CPI (M) also opposed the decision to further liberalise the telecom sector.

``It is self-defeating on India's part not to revise the present FDI ceiling of 49 per cent. The country requires more foreign investment in cellular and basic telephony because there is no money forthcoming from savings, domestic finance is unavailable, Indian corporates do not have cash and the DoT will soon be seeking budgetary support,'' said a MNC representative whose organisation has maintained an outpost here till the foreign equity limit is suitably revised.

Except for AT & T and Hutchison and to some extent British Telecom, most global telcos have left the country. These include U.S. West, Swiss Telecom, Bell Canada, Telstra and Nynex. It is India which needs to attract global telcos into India. ``By retaining the FDI limit at 49 per cent, I don't see investment flowing into India particularly in basic and cellular telephony,'' he observed.

However, the domestic chambers of commerce complimented the Government for taking bold decisions on the telecom front. The Associated Chambers of Commerce and Industry felt the Government should now abolish licence fees for all services to help companies and benefit the consumers. It also called for further restructuring of telecom services by allowing migration towards convergence of voice, data, video and computers through the same media.

The Federation of Indian Chambers of Commerce and Industry too welcomed the move towards corporatisation of the DoT and the TRAI's recommendations for opening 21 circles. ``Corporatisation of DoT will help mobilise additional resources for major projects for which Rs. 3,00,000 crores will be needed. The new corporation will be in a position to raise dent as well as equity from the capital as the DoT's present book value has been estimated at Rs. 70,000 crores making it the ninth most valuable telco in the world. The new corporation should be able to leverage this to raise additional funds,'' noted the FICCI.

On the other hand, the senior CPI(M) leader, Mr. Nilotpal Basu, felt that the manner in which the Government had decided to go ahead with the decision to corporatise the DoT will ``spell havoc for the expansion of the basic telecom services network and tele- density''. In a letter to the Prime Minister, Mr. Basu said the opening up of several sectors monopolised by the DoT so far will result in the proposed corporation's surplus being completely wiped out. He demanded that the Government spell out the financial package to make good the steep revenue loss the corporation is sure to suffer.

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