Reliance permitted to leave USOF pact

24 Dec 2013

Reliance Communications (RCOM) and a subsidiary, Reliance Telecom Ltd (RTL) have been granted permission by a tribunal to completely withdraw from the Universal Service Obligation Fund (USOF) and the Universal Service Obligation Fund Project (USP) agreement, the Hindu Business Line reports. Operators were obliged to hand over 5% of their gross revenues to the USOF, to bankroll the expansion of networks into rural areas. Under the terms of the deal, the USOF was to ensure the handover of tower sites ready to use, within one year of the contract. Having inked the agreement on 1 June 2007, the sites were due to be transferred to the telco before 31 May 2008. This date was missed however, with the USOF delaying by more than 18 months and making the project unviable, the telcos claims. The tribunal agreed with RCOM and RTL that USOF had failed to ensure delivery of a majority of telecom towers in a holistic manner and within the contractually-agreed timeline and as such, the duo were allowed to withdraw from the project. A spokesperson for the cellcos added: ‘RCOM and RTL’s legitimate and persistent stand with the USOF, that we have the right to be discharged from the reciprocal obligations under the agreement, is vindicated by this ruling.’

India, Reliance Communications (RCOM)