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Exit policy for new telecom companies planned by Communications Ministry

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The communications ministry is planning a policy to allow companies that were given mobile phone permits by former telecom minister A Raja to exit the sector if they agree to forfeit the entry fee.

Ministry officials said that by allowing these operators, the ones who have not been able to start operations, to exit would be a better option compared to cancelling the licences, a course of action recommended by sector regulator TRAI. “We are working on an exit policy – we plan to announce this along with a mergers and acquisition policy for the sector – the details are being worked out,” said Telecom Minister Kapil Sibal.

The trigger for an ‘exit policy’ is that telecom regulator TRAI has turned down DoT’s demand that it reconsider its November 2010 recommendations that the government cancel a total of 69 telecom licences of five operators, including joint ventures of Telenor ASA , Emirates Telecommunications Corp and Sistema JSFC.

The department is also examining if it is possible to allow mobile phone companies to selectively surrender licences and spectrum in specific regions, the officials quoted above added. Most of these companies famously paid Rs 1,658 crore for all-India licences issued in 2008.

These officials say an exit policy will also free up valuable 2G spectrum, largely used for voice services, which can be allotted to incumbents either through an auction or an ‘administrative process’ as suggested by TRAI. In its latest communication to the telecom department, TRAI has said as much as 210 MHz of 2G spectrum would be available if DoT accepts its recommendations for cancelling 69 mobile service licences for failure to meet so-called rollout obligations.

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