Attorney-General clears Koshika bail-out

Attorney-General clears Koshika bail-out
NAVIKA KUMAR

NEW DELHI, FEB 23: Koshika Telecom, owned by the Usha Group belonging to Vinay Rai, may have hit jackpot if the Attorney-General Soli Sorabjee's opinion is anything to go by. The Attorney-General has said that the company which held cellular licences for Uttar Pradesh (East), UP (West), Bihar and Orissa can be allowed to migrate to the lower licence fee or revenue-sharing regime. This is despite the fact that three of its licences had been terminated for being a chronic defaulter in paying licence fees, and the fourth licence in UP (East) was not terminated only because the other service provider in the circle was also a defaulter -- under the law, there must always be at least one service provider in a region so that customers don't suffer.

Interestingly, the A-G's latest opinion, is quite divergent from the one he gave on October 30, 1999, when he justified cancelling Koshika's licences by saying that it was a chronic defaulter.

What's more, the AG's latest opinion leaves fairly substantial grey areas, which could be used to help the company gain anywhere between Rs 120 and Rs 150 crore, based on the existing licence fees for these circles.

Koshika's licences for Bihar, Orissa, and UP (West) were terminated on May 22 last year. The A-G has now opined that these can be restored, and Koshika should be allowed to migrate to the lower revenue-sharing licence fee formula from October 1, or November 1.

While non-defaulting telecom firms were allowed to migrate to the lower licence fee regime under the revenue sharing formula from August 1, the A-G has opined that Koshika should be allowed these benefits only from a later date -- between October 1 and December 1, for different circles -- since it was a defaulter.

The problem, however, is the grey areas. Since Koshika didn't operate from May last year to now, it is open to interpretation as to whether the company will be asked to pay the higher fixed licence fee for this period or no fees at all since it was not commercially operating cellphone services during this period. The telecom department (DoT) has not asked for this clarification, nor has the A-G chosen to shed any light on it.

Second, in his earlier October opinion, the A-G had said that Koshika should be allowed to migrate to the new package only if it paid 40 per cent of all dues by December 31, apart from a few other conditions. Now, Koshika didn't do that, but will still get the same advantages in terms of being allowed to revive its licences.

For the UP (east) circle, where the company has been running commercial services since May 22, 1999 when its licences were terminated, the AG states that the migration date could be December 1. For the other three circles, UP (West), Bihar and Orissa, the A-G has stated that since no commercial services were allowed, December 1 cut-off date would be ``too harsh''. The A-G has suggested that for these circles, the company could be given a revenue sharing arrangement from October or November 1 (the A-G doesn't bother about the fact that the company agreed to accept the migration package on November 30.)

While it has been clear for sometime in telecom circles that the company's efforts at lobbying to revive its licences would bear fruit sooner or later, what has come as a surprise is the A-G's logic given in his opinion sent to the Communications Ministry. Apart from the ambiguity which may lead to financial gains for the company, it would also be inequitable to the second operator in the same circles where Koshika operates, who have paid up all their dues.