TRAI gives license fee shocker to telecom firms

The Telecom Regulatory Authority of India (TRAI) has suggested that license fee paid of a telecom licensee who wants to exit should not be refunded.

This may come as a shock to most telecom companies who had said in their response to an earlier consultation paper by TRAI that this fees should be refunded on a pro-rata basis. The telecom regulator has in fact said that there really is no need for an exit policy for the sector.

In a response paper today, TRAI said, “Based on the comments received from stakeholders and keeping in view the Hon’ble Supreme Court Judgement of 2nd February 2012 on petition no. 423/2010 and petition no. 10 of 2011, the Authority proposes to recommend to the Government that there is no need for separate Exit Policy, that the entry fee paid by the licensees will continue to be non-refundable.”

It said that the present condition, where licencees can surrender licence by giving a notice of at least 60 calendar days in advance, shall continue to be applicable.

TRAI has now sought stakeholders’ response to its views by 5 April. But this proposal of the Authority may make it difficult for new operators, specially those caught in the 2G scam investigation, to surrender their licences without losing money.

Earlier, the Department of Telecom was looking at various options to weed out some of the new operators, especially those who have missed roll-out obligations. This included asking new operators to pay a huge penalty if they wanted to continue to hold the licences issued to them in 2008.

Some operators, whose licenses were cancelled by the SC this January-like Uninor and Sistema Shyam-have already said that they are long term players and want to continue doing business in India.

Its some of the others, who have not made major investments in the business, who would have benefited had TRAI actually come out with an exit policy which also spoke of refunding some of the license fees.