Vodafone India has blamed the Department of Telecommunications of acting against public interest by not extending its licences beyond 2014. This would result in disruption of services across Delhi, Mumbai and Kolkata, the three major telecom circles in the country.
On March 22, the DoT rejected Vodafone India’s application to renew licences in these circles, meaning the company would have to participate in spectrum auction to continue operations. The incumbent GSM operator received licences in 1994 with a 20-year-tenure.
“The rejection of application shows that the DoT has acted against public interest as it will lead to disenfranchising 50-60 per cent of the market, leading to disruption of services,” Vodafone India, a subsidiary of UK-based Vodafone Group, said in its letter to the DoT.
ALLEGED MISREPRESENTATION
In its letter dated March 21, the company also alleged that the DoT has misrepresented its position, as it had never sought “extension for free”. Instead, it had requested the DoT to propose new terms and conditions for the extension, which were not provided.
The company has also accused the country’s telecom licensor of “seriously” misinterpreting the National Telecom Policy 2012 (NTP) by stating that spectrum and licences are already de-linked. According to the policy, spectrum de-linking is for future licences. The company has requested the DoT to withdraw its rejection letter.
Vodafone India also reiterated that it is still governed by the provision of NTP 1999 and NTP 2012 and that the DoT cannot take away rights promised or accrued earlier to the operator.
MOUNTING COSTS
“As the Government has proposed, licences and spectrum would have to be won separately by the operators…. In the event, operators manage to win the spectrum, they will have to pay the huge cost. This will increase the cost of operation significantly and would increase leverage on the balance sheet manifold,” said Hemant Joshi, Partner with Deloitte Haskins & Sells.
“Currently, services are provided by operators at tariffs which are one of the lowest in the world. However, with such policy initiatives, operators would focus on lucrative markets as they can provide services only with limited spectrum,” he added.
Earlier in February, Vodafone India had moved the Delhi High Court challenging DoT’s decision to auction the 900 MHz spectrum that it holds. The Mumbai-based company, in its petition, said the move comes at a time when its applications for licence extension are pending.
rajesh.kurup@thehindu.co.in