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September 1, 1997


New deadline for basic phone operators

The government has set September 30 as the new deadline for prospective basic telephone operators to sign a modified license agreement formalised to accommodate most of their demands.

"No penal interest will be payable for the year-long delay since the last time limit set for October 18, 1996," Telecom Commission Chairman A V Gokak has said.

He told a press conference in New Delhi that the main concession of assignability of license granted to basic service providers is being extended to cellular mobile phone operators to help them raise funds to meet their license fee obligations.

He said the government has also decided to extend by 18 months, from the original 12, the time for commissioning a basic phone project from the date of signing of agreements. The government would consider the operators' request for a waiver on liquidated charges for delays up to six months "based on the merits and circumstances of each case," Gokak said.

Gokak said that based on the three rounds of tendering since 1995, letters of intent have been issued to eight companies for providing basic telephone services in 12 circles.

Bharti Telenet and Reliance Telecom are the only two companies which have paid the first year's license fee and concluded the agreements for Madhya Pradesh and Gujarat circles.

In respect of cellular services, 33 licenses have been issued for 18 telecom circles apart from eight metropolitan centres.

The Telecom Commission chairman said that the concessions extended by the government show the flexibility towards commitment to accelerate the process of liberalisation in the telecom sector.

He said in case the service under basic service license is prevented because of force majeure, events of war, acts of god and direction from statutory authority, the licence fee would be waived "to the extent payable for the period covered entirely by such event and the license period will also be extended to that extent".

Gokak said the government has decided to adopt provisions of the Indian Arbitration and Conciliation Act, 1996, as this law has been enacted during the post tender period. The law is in tune with international requirement and practices.

He said that at the time of inviting the bids for basic and cellular services the ceiling on external commercial borrowings was only twice the amount of the foreign equity.

Considering the constraints felt by prospective operators to raise funds from foreign financial institutions, the finance ministry has now permitted such borrowings up to 50 per cent of the project cost.

The government has also agreed to consider objections of private operators in the case that telecom authorities decide to modify terms and conditions of license in the public interest.

He said the concessions contained in the modified license agreement would be extended to companies which bid for the remaining nine circles as and when the government decides to go for rebidding in these circles.


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