Rediff On The Net, Infotech: ICICI suggests cell operators share revenue with DoT


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July 1, 1998

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ICICI suggests cell operators share revenue with DoT

The Industrial Credit and Investment Corporation of India, in its final report on the status of the cellular circle projects, has suggested a revenue-sharing arrangement to replace the fixed licence fee during the extended licence period, if the government agrees to grant such an extension.

Earlier this year, the Department of Telecommunications had mandated

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ICICI to submit a report on the status of the cellular industry.

A parallel mandate was also given to the Bureau of Industrial Costs and Prices, which is yet to furnish its report.

According to the final report, which was submitted to DoT this week, ICICI has suggested that during the extended licence period, between the 11th and 15th years, a revenue-sharing agreement could be instituted.

However, the institution has not suggested the structuring of the agreement, given that the government has already indicated that a final view would be taken only after the BICP submits its report.

Apparently, the institution has desisted from detailing the agreement since it feels that it should be the prerogative of DoT and the finance ministry.

In the interim report, ICICI had not called for any licence fee in the extended period. The earlier report merely concluded: "The licence period to be extended to 15 years and net present value of licence fee to be kept same as NPV for 10-year licence period (in effect giving five extra years of revenues at no additional cost).''

Later, in a meeting with DoT, the issue was discussed. In a summary of the meeting, a DoT note says that the "ICICI was able to appreciate that a licence fee after the tenth year may be needed.'' At this meeting, the possibility of a revenue share after the tenth year was mooted.

ICICI has also indicated in its report that the critical issue was not the moratorium but the extension of the licence period from 10 to 15 years. "Extension alone is critical to securing funds for some projects,'' a banker said.

It was also pointed out that extension would not automatically secure funds, implying that projects which did not have strong promoters would still find it difficult to tie up funds.

- Compiled from the Indian media

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