BSNL’s WiMAX franchisee plans could face hold-up

17 Sep 2010

Indian state-owned telco Bharat Sanchar Nigam Ltd (BSNL) may find its plans to offer its WiMAX service via a franchisee model facing further delays, LiveMint is reporting. BSNL is looking to offer its WiMAX spectrum and brand name to other parties to launch commercial wireless broadband services in return for a share of any revenue generated, but the Department of Telecommunications (DoT) has reportedly objected to a number of changes made by the PSO to the agreements offered to certain proposed partners. ‘The changes are very different from the expression of interest (EoI) on the basis of which the franchisees bid for the subsequent tender that came out,’ an unnamed DoT official noted, adding, ‘This is a public document and it is not correct that the changes were made in the final agreements.’ The regulator has objected to changes made to seven clauses in the original EoI that was first issued in September 2009, with the most notable of these being that the franchisees would be allowed a one year moratorium from paying spectrum charges after the agreement is signed. The original EoI stated that annual spectrum charges would be recovered from the franchisee at the rate of 4% of total revenue, but in the final agreement BSNL has stipulated that spectrum charges would be recovered through equated monthly instalments (EMI) calculated at an interest rate of 10.8% over a 15-year period. Further, under the new terms, in addition to the EMI the annual spectrum charges (1% of annual revenues) will be deducted from the revenue as pass-through cost.

The DoT has argued that the revised agreement would not make the conditions for WiMAX franchisees favourable, and the objections are now expected to be put forward to the BSNL board.