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MTNL's cellular licence expires on April 6; seeks extension from DoT

The debt-ridden state-owned telco will have to either shell out Rs 11,000 crore for renewing its licence or close down services if the government does not give in to long-standing demand for an extension to the validity period, at no extra cost, on technical grounds.

twitter-logo BusinessToday.In   New Delhi     Last Updated: May 31, 2019  | 12:25 IST
MTNL’s cellular licence expires on April 6; seeks extension from DoT
MTNL's revenue and profitability came under tremendous pressure with intensified competition in mobile and landline telephony services/Representational Image

Debt-ridden Mahanagar Telephone Nigam Ltd's (MTNL) 20-year cellular licence is valid only till April 6, 2019, and renewing it would reportedly cost the debt-ridden corporation around Rs 11,000 crore. Hence, the state-owned telecom service provider has stepped up its long-standing demand for an extension to the validity period by two more years, at no extra cost, on technical grounds.

In a series of letters written to the department of telecommunications (DoT) in the last few months, MTNL has argued that the year of licence allocation to it should not be taken as April 1999 since the geographical coverage of its mobile licence was not at par with the private telecom operators initially.

In a recent letter to DoT secretary Aruna Sundararajan, MTNL chairman and managing director PK Purwar added that in 1999 its licence was "non-standard" and became "standard" only since January 11, 2001, The Financial Express reported.

MTNL, which started services in the lucrative circles of Delhi and Mumbai in 1999, says that it had initially done so on a basic service licence. The latter was for landline services and since it started mobile services under it - something possible at the time through what was known as limited mobility- its area of operation was restricted to Delhi Municipal Corporation and Mumbai Municipal Corporation. Back then telcos charged heavily even for incoming calls.

MTNL has been pointing out since 2017 that its cellular licence was only brought at par with other private operators when it was allowed to extend the coverage to Delhi NCR areas of Ghaziabad, Faridabad, Noida and Gurgaon and in Navi Mumbai and Kalyan areas of Mumbai in 2001.

"It is the unique and only case in entire telecom licensing regime where CMTS [cellular] licence is granted with non-standard operating area as per restricted basic service licence geographical area in deviation of prescribed and defined standard licence area laid down under CMTS licence regime", MTNL reportedly told the DoT. It added that if the government does not accept its request, the telco may seek legal remedies.

The loss-making telco's logic is that since its private sector peer bagged a CMTS licence that included these areas earlier on, the playing field was not level - MTNL was competitively in a disadvantageous position and could not fully commercially exploit its licence. The daily added that MTNL has buttressed its case for extending the licence validity with Additional Solicitor General Vikramjit Banerjee's legal opinion.

Once a household telephony brand, MTNL's revenue and profitability came under tremendous pressure with intensified competition in mobile and landline telephony services. In fact, it has been making losses continuously for the past nine fiscals and was previously declared "incipient sick" as per the Department of Public Enterprises guidelines.

If the government does not give in to MTNL's request in the coming week, the debt-ridden telco will have no option but to shut down its services- mainly 2G as it got 3G spectrum in 2010 so its validity continues.

"Non-correction of effective date of MTNL's CMTS licence to 11.01.2001 will ultimately result in closing down of services beyond 05.04.2019 to MTNL mobile subscribers and in-roamer customers of BSNL. In order to continue providing uninterrupted mobile services, the extension of MTNL's CMTS licence along with spectrum is an urgent necessary", Purwar added in his letter.

MTNL currently has 6.2 MHz spectrum in 900 MHz band and 2.2 MHz in 1800 Mhz band. The company is willing to surrender the latter entirely and retain 5 MHz in 900 MHz band. However, even in this case it will have to shell out Rs 8,000-9,000 crore.

MTNL reportedly added that in the event the DoT does not agree with this request, it should issue specific and unambiguous instructions to it to close down its services after April 5. In the absence of any such clear instructions, MTNL said it will continue to operate the services based on the ASG's legal opinion.

Significantly, while any closure of MTNL's services would affect its 1.5 million 2G users, the latter will have the choice to upgrade to either MTNL's 3G services or port out to 2G services of Bharti Airtel or Vodafone Idea so customers won't really be inconvenienced. The telco's total subscriber base in both circles stands at 3.7 million.

(Edited by: Sushmita Choudhury)

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