At present for most cellular circles, the licence fee payable over a period of 10 years almost constitutes 80 per cent of the total project cost. Therefore any sops given to the cellular operators on this count is most welcome.

Secondly, loans to telecom projects being of a seven year maturity exerts tremendous pressure on the cellular operators to meet their licence fee obligations. In this scenario, the lenders are hardpressed to reschedule a repayment within three years. Moreover, delay in the realisation of projected revenues has affected cash flows thereby putting the lenders to these projects at a great risk.

DoT's move would definitely help inreleasing much needed funds to the cellular operators and go a long way in reducing the risks of lending. Also pegging the licence fee NPV (net present value) at current levels for a repayment period of 15 years would considerably reduce annual outflow.

Thirdly, the fixed cost per subscriber has been quite high initially, as a small subscriber base has contributed less for bearing licence fees, equipment costs, interest and developmental charges. This has put tremendous pressure to fund operating losses for the initial four to five years.

Therefore, the request by the Cellular Operators Association of India (COAI) to increase monthly rentals to Rs 575 from Rs 156 is not misplaced.