The Hindu Business Line : Ministry agrees to refund Reliance Comm Rs 112 cr

New Delhi, Dec. 4 In an unprecedented move, the Communications and IT Ministry has agreed to refund about Rs 112 crore to Reliance Communications (RCom), which the company had paid as part of the entry fee at the time of taking the approval for offering dual technology in 2007.

The refund is on account of the company surrendering the permission for dual technology in six circles where it already has GSM services. However, in earlier instances, the Government had refused to give back the entry fee when operators had surrendered their licences. The Unified Access Service Licence terms and conditions also stipulate that the entry fee is non-refundable.

While RCom had paid Rs 1,651 crore for rolling out dual technology (both CDMA and GSMs mobile services) in 20 telecom circles (each circle is equivalent to a State), the company already has GSM-based cellular services in six circles in the eastern part of the country. RCom was asked by the Government to surrender the newly acquired dual technology approval in six circles since DoT rules do not permit a company to hold GSM spectrum under two different entities in the same circle. RCom sought a refund of the entry fee for the six circles.

Until now, DoT had refused to refund the entry fee to any operator. For example, Idea Cellular was asked to give up its new licences for Punjab and Karnataka after the Aditya Birla-owned company acquired Spice Telecom. Since Spice had mobile operations in these two circles, DoT wanted Idea to give up its licences in these areas without getting any refund. Idea Cellular had paid Rs 350 crore for acquiring the two licences prior to acquiring Spice.

Earlier in 2004, DoT had refused to give back Rs 145 crore to Bharti Airtel after the company had surrendered four fixed line telephony licences. In all these cases, DoT has been taking a stand that entry fee, once paid, is non-refundable.

Explaining the rationale for refunding the fee in the case of RCom, senior Government officials said that it could not be compared to earlier cases and a distinction has to be made between surrendering a licence and withdrawal of an approval. They said that since DoT was withdrawing the in-principle approval given to RCom for dual technology in the six circles, it would be illegal to hold the fee.

“There is no surrender of licence in this case. Reliance continues to have all the licences it already had before it was given the approval to offer dual technology. In the earlier cases, operators were asking for a refund after giving back their licences. The permission to roll out dual technology was given to RCom on top of its existing unified access licences,” said a Government official.

According to an internal note, DoT had also suggested that instead of refunding the money, it could be used to adjust any outstanding dues or future payments to be made by RCom. According to DoT’s estimates, RCom would have to pay Rs 200 crore in the third quarter of the current year as licence fees and, therefore, the excess money paid by the company could be used in that regard.

However, this has been rejected by the Communications Ministry on the grounds that since DoT was withdrawing the approval for dual technology given to RCom in the six circles, it may not be legally tenable to adjust the money against dues in other circles.