New telecom players to be victims of credit crunch
By siliconindia   |   Thursday, 23 October 2008, 23:42 IST   |    1 Comments
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New Delhi: New telecom players who look to roll out their networks could be the latest victims of present liquidity crunch. As these operators find it hard to achieve financial closure, they are now looking to seek help from the government and demand relaxation in rollout obligations, reported The Financial Express. Under the current rollout obligations, operators must achieve 10 percent coverage of district headquarters within the first year of spectrum allotment within a circle and 50 percent by the third year. None of the new licensees are likely to achieve these obligations because of the difficulty and prohibitive cost of raising funds. Moreover, In order to fulfill the first-year rollout obligations alone for a pan-India network, each operator would need to spend at least Rs 22,000 crore. An official of a new telecom firm said, "We will certainly face problems in raising funds and the government should provide us some relief by way of relaxing the rollout obligations.� �The existing players have also defaulted on their rollout obligations," he added. Department of Telecom (DoT) may face a problem to take decision on rollout relaxation as any rollout relaxation would have to be applicable to existing as well as new and an amendment would have to be made in the unified access service license. Struggling for existence, many new licensees are now moving towards international partners. For instance, Swan Technology recently offloaded its 45 percent stake to UAE telecom major, Etisalat and Unitech is also close to divesting 26 percent to a foreign telecom firm. The government has however given some assistance for new operators which include the introduction of intra-circle roaming which enables an operator to extend coverage area beyond the physical network by leasing spectrum from established players within a circle. However, new licensees believe that unless there is relaxation in the rollout obligation, the intra-circle roaming doesn't mean much to them.

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