PSU Watch logo

| Sale of Central Electronics Ltd reaches concluding stage, financial bids received |   | Mumbai metro to extend operation hours, increase frequency from Oct 17 |   | Indigenisation push: 7 defence CPSEs created |   | CIL to refrain from holding any e-auction till situation stabilizes |   | Coal output from captive mines to go to power sector |  

Loss-making MTNL must pay Rs 11,000 cr or shut down its 2G services. Know why

PW Bureau

As the expiry of the 2G licence given to MTNL draws closer, it is seeking a two-year breather for renewing the licence because it cannot afford to pay the renewal cost

New Delhi: As the expiry of the 2G licence given to state-run telecom provider Mahanagar Telephone Nigam (MTNL) draws closer, the company is seeking a two-year breather from the government for renewing it because it is going to cost Rs 11,000 crore. The company's finances are in a battered state and it is in no position to be able to pay the amount. In case the government refuses to yield to the demand, MTNL will have to shut down its 2G services.

MTNL makes its case

In a series of letters to the Department of Telecom (DoT) in the past few months, MTNL has been trying to make its case before the authorities by invoking a technical point. The telco has argued that the year of licence allocation to it should not be taken as April 5, 1999 but January 11, 2001 because when it started providing services in Delhi and Mumbai in 1999, it was operating on a basic service licence and not a cellular mobile telephony licence, which was given to MTNL in January 2001. If the base year is shifted to 2001, then the licence's renewal will be due only in January 2021.

Between 1999 and 2001, MTNL had a basic service licence for landline services and eventually it had started providing mobile services under the same licence through what was called limited mobility. In Delhi, its service area was restricted to the capital city alone and not the national capital region, which includes Noida, Ghaziabad, Faridabad and Gurgaon. In Mumbai, as well, it did not cover the Kalyan area.

The state-owned telecom firm has said that the absence of a CMTS licence put MTNL in a disadvantageous position with respect to its private counterparts till 2001. By virtue of having a CMTS licence, private telcos were able to cover areas that MTNL could not. Therefore, MTNL was playing on a non-level playing field till 2001.

MTNL chairman and managing director PK Purwar wrote in a recent letter to DoT secretary Aruna Sundararajan, “It is the unique and only case in entire telecom licensing regime where CMTS 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 has backed its case by seeking a legal opinion from additional solicitor general of India Vikramjit Banerjee.

What happens if govt turns down the request?

If the request is turned down by DoT, then MTNL will have to shut down its 2G services. However, it will continue to provide 3G services as it got the spectrum only in 2010 and its validity continues. The CMD wrote to the government, “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 necessity.”

The telco has said that if the DoT refuses to accept MTNL's request, it should put down specific and unambiguous instructions to it to close down its services after April 5. If DoT fails to do that, MTNL will continue to operate the services based on the legal opinion it has received from the ASG. Even as MTNL has laid out the alternatives for the government on the table, it has also said that it will seek legal recourse if the government turns down its request.