Aug 11, 1999|
Telecom deal on
The Delhi High Court has permitted the shifting of the telecom operators (who opt to do so) from a licence fee regime to a revenue sharing regime on the condition that the deal will be subject to the ratification of the new government. The High Court has also stated that the Election Commission is free to choose its course of action regarding the implementation of the deal, pending the elections to the Parliament.
The High Court's decision will come as a shot in arm to many a telecom operators who have been either defaulted or are on the verge of defaulting on their license fee payments. Earlier, when bidding for the telecom circles, the bidders had bid astronomical amounts on the expectations of the existence of a large potential market for cellular and basic telephony services. However, the growth and penetration of such services has been far below the projections, leading to cash flow problems.
The revenue sharing regime will ease the pressure on the cash flows of operators, as they will have to pay a fixed percentage of their cash flows as fee to the government. This will stimulate investment in the telecom sector and probably lead to a higher geographical penetration in the next few years.
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