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June 5, 1997


Telecom licence fee to be paid by June 30

If companies holding letters of intent for basic telecom services pay their licence fees before June 30, the department of telecommunications will not penalise them. If they don't pay up, the Telecom Commission will have to decide whether these firms will be penalised or if the date should be extended.

Earlier, DoT had fixed October 18, 1996 as the cut-off date for payment of the first instalment of licence fees. If the fees are not paid before the cut-off date finally decided on, the penal rate will be 5 per cent higher than the State Bank of India lending rate, it is decided.

Essar, which had legal problems on the issue, had proposed to provide financial bank guarantees of Rs 250 million and performance bank guarantees of an equal amount within four weeks from date of the court order. It had informed the DoT it would pay the licence fee before September 30. The company has to pay Rs 1.31 billion as the first instalment of the licence fee.

The agreement stipulates that if Essar fails to furnish bank guarantees and the licence fee within the time frame, then the DoT can encash the bank guarantees and withdraw the licence from Essar.

Essar had moved the court against DoT's decision to encash the bank guarantees worth Rs 250 million submitted as bid bond for starting basic services in Punjab. Essar had not paid even the first instalment of the licence fee. The company claims the DoT's licence agreement deviated from the tender conditions.

Reliance, which paid its first instalment of the fee, was also exempted from the payment of penalty. It signed the licence agreement this March.

Now the DoT is taking a less usurious stand and has accepted most demands of companies holding letters of intent.

In the new draft assignability agreement DoT had clarified that the foreign financial institutions will also be considered as lenders but those who supply equipment on credit will not be put in the same class. Private operators have also been exempted from paying other infrastructure costs for the first three years.

In the new interconnect agreement, no change was envisaged in the interconnect charges which remain at Rs 54,000 per annum for a two-megabit link.

The matter may be referred to the Telecom Regulatory Authority of India which will take a final decision on the matter.

- Compiled from the Indian media

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