SCs dismissal to hit telcos; extending deadline only hope

Romal Shetty, head, telecom, KPMG, said that the dismissal of the review petitions by the Supreme Court did not mean that the telecom companies would be greatly impacted and added that an extension of the auction
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Apr 04, 2012, 11.10 PM | Source: CNBC-TV18

SC's dismissal to hit telcos; extending deadline only hope

Romal Shetty, head, telecom, KPMG, said that the dismissal of the review petitions by the Supreme Court did not mean that the telecom companies would be greatly impacted and added that an extension of the auction

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SCs dismissal to hit telcos; extending deadline only hope

Romal Shetty, head, telecom, KPMG, said that the dismissal of the review petitions by the Supreme Court did not mean that the telecom companies would be greatly impacted and added that an extension of the auction

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National Head- Telecom, KPMG | Capital Expertise: Equity - Fundamental

Romal Shetty, head, telecom, KPMG, told CNBC-TV18 that the dismissal of the review petitions by the Supreme Court did not mean that the telecom companies would be greatly impacted. Shetty explained that the extension of the deadline till the auction on June 2 was the hope that the companies could look forward to.

Senior journalist Paranjoy Guha Thakurta told CNBC-TV18 that the Supreme Court stuck to its position, as the entire system of awarding licences bundled with spectrum was flawed.

Q: What is your opinion on the Supreme Courtís dismissal of review petitions filed by seven telecom companies and the Prime Minister?

Shetty: If that is the case it would be possible to extend the deadline and not stop the operation of these companies which is cause for some relief. Halting all operations of all the affected telecos on June 2 would have a huge impact on their presence in India as well the interest to continue the auction.

Q. What is the recourse thatís available to these companies? Apart from Telenor and Sistema who are invoking arbitration clauses under the bilateral investment treaties, are legal resource options now very limited?

Shetty: Yes. Though I am not a legal expert, once the Supreme Court has decided not to look at these review petitions will have a impact on the alternatives currently available today. The extension of the deadline till the auctions would be some relief. But otherwise, it leaves them with very limited options.

Q: What in your assessment what would be the most feasible timeline to conduct the auction?

Shetty: The problem this time is when the government wants to conduct the auction and seek to avoid legal hassles. The government is also not clear about the norms Ė can only existing players enter or are new entrants allowed? 

So there are a number of issues that need to be resolved involving the views of all parties concerned. Itís probably going to be very difficult to do it in four monthís time.

But if the government doesnít do it and the Supreme Court does not extend the deadline, itís going to have a big impact on these companies.

Q: What would be the route that government need to adopt from hereon?

Shetty: Firstly, the current process needs to be resolved as fast as possible to reduce uncertainty.  Second is, as long as itís very clear, I donít think that anybody has anything to complain. So, the essence is speed and clarity. I think those are two things, which needs to be done quickly.

Also read: Telcos deliberate further legal action against SC dismissal

We understand that all seven petitions filed by the telecom companies have been dismissed. The Supreme Court does not find that there is any error apparent ad hence no grounds or justification to hear the matter?

Paranjoy: The Supreme Court has stuck to the decision that was made earlier by Justice Singhvi and Justice Ganguly.

Q: The Prime Minister's petition along with the petitions filed by the seven telecom companies has also been dismissed?

Paranjoy: The TRAI chairman has already said that the new set of guidelines will be announced. This means that all the licences will be scrapped, the spectrum will be re-auctioned and the entire process will start all over again. Some sort of a mechanism will be worked out to protect customers.

Essentially, people who already have mobile subscriptions with an existing company whose licence is cancelled Ė there will be some interim arrangement made that till such time as the new licencee or the new spectrum allottee is finalised. Customer would get a choice even if the customer doesn't opt for number portability to move to a new subscriber.

The Supreme Court has stuck to its own position, but the entire system of award of licences bundled with spectrum was flawed.

Q: The other petition filed by the government has been admitted for hearing on the April 13. So, we are still trying to understand what the ramifications and the implications of that are, but one petition filed by the government has been listed for hearing on the April 13.

Paranjoy: There are a slew of issues. One, is the manner of auctioning and the time-frame of the auction. For instance, we know that the DoT has asked for an extension of the deadline. There are a number of issues to be resolved. There has been no stay on the cancellation of licences and re-auction.

Also Read:

Govt wants clarity before reframing telecom license policy

Happy with SC ruling; await April 13 outcome: Telecom Secy

Telcos deliberate further legal action against SC dismissal

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