DoT calls for limits on number of operators; new entrant stakes locked in for three years

27 Jul 2009

India’s Department of Telecommunications (DoT) is understood to have called on the Telecom Regulatory Authority of India (TRAI) to limit the number of operators licensed to offer mobile voice services, the Economic Times reports. With more than 20 applications pending for telecoms licences, the DoT has asked the TRAI to review a previous decision not to restrict the amount of operators allowed in any one circle. In its message to the TRAI, the DoT said: ‘The number of pending applications in every circle ranges from 13-19 and consideration of these will push the demand for spectrum in a substantial manner.’ Additionally, the DoT also highlighted the fact the telecom tribunal had called for a reassessment of the policy not to impose limits on the number of operators.

The DoT’s decision to press the matter is believed to have been prompted by a recent Delhi High Court ruling. The court overturned a DoT decision from January 2008 that set 25 September 2007 as the cut-off date for granting new telecoms licences; the original deadline was 1 October 2007. As a result of the court verdict, approximately 20 companies are thought to be considering legal action against the DoT after they were denied licences, having submitted applications before the original deadline but after the altered cut-off date. While the DoT has never offered a formal explanation for changing the date, several companies that missed out on concessions alleged that the decision was made so that only certain India-based companies would bag licences.

In separate regulatory news the DoT has confirmed that new entrants to India’s telecoms sectors will be prohibited from selling equity shares for a three-year period. ‘There shall be a lock-in period for sale of equity of a person whose share capital is 10% or more in the UAS (unified access service) licensee company,’ the regulator stated. Under the new legislation additional equity shares can be issued through private placements or public issues, but only if companies do not pay out dividends.