According to industry sources, there was a lobby which was stronger and more powerful than the one led by the Cellular Operators Association of India (COAI), that was working overtime to ensure that these concessions were denied by the government. And succeed they did, albeit partially.

It is understood that the counter-lobby was led by a few cash-rich Indian groups with interests in telecom and some foreign telecom companies eyeing some of the local cellular ventures. These companies stood to gain immensely if the demands put forward by COAI were denied.

While the demands have not been fully met, the partial acceptance of these, industry sources say, surely marks the victory achievedby the counter-lobby.

The cellular operators were asking for a twin relief -- a two year moratorium on payment of licence fees to ease their cash flow situation in the short term and an extension in the licence period from 10 to 15 years to facilitate raising of loan term debt.

While the government a few days ago announced the extension of the licence period to 15 years, the two year moratorium on licence fee payments has been denied. Also, the extension will be given only to those operators who have not defaulted on licence fee payments or have shown adequate guarantees to cover their outstanding licence fee payments.

This measure, industry sources say, will lead to the cash flow situation of some cellular operators worsening thus jeopardising their ventures.

According to them, on the one hand, some operators have defaulted on licence fee payments resulting in their outstandings zooming. On the other, they have also been unable to secure adequate guarantees to cover their outstanding licence feepayments.

If they are unable to either pay the licence fees or show adequate guarantees to cover the outstanding fees, their licence period would not be extended and would face the threat of termination of their licence.

That exactly is the result that the counter-lobby is hoping and striving to achieve, industry sources say.

Threatened with the prospect of not getting an extension in licence period and at the same time facing the possibility of a termination of their licences, the valuations of these cellular companies will plunge. The promoters of these ventures, industry sources say, will be left with no option but to sell their stake to any willing buyer and salvage a part of their investment as otherwise they would lose their investment altogether.

"With valuations of these ventures falling to very low levels, investments in them would become attractive and at that time these cash-rich companies will just pick them up," said an executive of a cellular company. It is understood that even theforeign companies who were opposing the sops would suddenly increase their investments by picking up stakes in these ventures.

"If the government had accepted both the demands, then the valuations of the cellular ventures would have increased or at the lease remained unchanged. So, by ensuring that the demands were not fully met, the interested parties have made sure that their cost of acquisition comes down drastically," said a Mumbai-based investment banker who has been unable to find a buyer for a stake in a cellular venture which has four circles.

"That is the reason why only two companies have been able to successfully conclude deals this year when stakes in more than half-a-dozen ventures are available," he added.

Industry sources say that the denial for a two-year moratorium on licence fee payments will lead to a spurt of consolidation in cellular business with the smaller and weaker players making way for bigger and stronger ones.

Although some smaller players will continue to remain inbusiness, they will, however, be restricted as regional players.