DoT wants government to overlook 4G auction rules for refunding BSNL, MTNL

The telecom depart has told the panel of ministers tasked with finding solutions to revitalise state-owned telcos BSNL and MTNL, that the spectrum auction rules of 2010, which stated that companies would not get a refund if they surrendered their airwaves, should not apply to the two public sector phone companies.

According to the DoT, BSNL and MTNL were given 4G airwaves or wireless broadband spectrum in 2008, two years ahead of the auctions of these frequencies to private operators. DoT added that the allotment letters given to the PSUs were silent on the surrender of bandwidth. The department, while asking the panel of ministers to consider two options for refunding BSNL and MTNL, had argued that private telcos were governed by rules under the Notice Inviting Applications (NIA), issued in 2010 prior to the auctions, while the PSUs were bound by rules issued by it in 2007.

A government had, last month, constituted a panel of ministers tasked with looking at ways to revitalise the two public sector mobile phone companies after telecom minister Kapil Sibal had impressed on prime minister Manmohan Singh the need to evolve a strategy to revive BSNL and MTNL.

According to a report in the Business Standard, the GoM was expected to meet in the next few days and discuss the proposal for trifurcation of the two behemoths. The plan was to spin off two new companies - one each for network infrastructure and land development - out of each telco, the report said.

BSNL and MTNL would continue to function as services and marketing companies, and among the new firms proposed to be spun off, each of the two would get one company to handle telecom infra (towers, networks, etc) and the technology business, and another (for land development and utilisation) to manage and monetise land assets in phases.

The GoM would also look at two alternative proposals for cash infusion into two telcos after they decided to surrender broadband wireless access spectrum to the government. BSNL gave up spectrum in six circles, while MTNL had done so in Delhi and Mumbai, the two circles in which it operated.

Among the proposals under consideration is refunding the companies the entire Rs11,259.48 crore they had paid for the spectrum - BSNL Rs6,724.51 crore and MTNL Rs4,533.97 crore. An alternate arrangement being considered is a pro-rata basis refund, since the spectrum had been allocated in 2008. This would involve total refund to the tune of Rs8,722.78 crore - Rs5,204.98 crore to BSNL and Rs3,517.80 crore to MTNL.