The Association of Basic Telecom Operators (ABTO) has sought a meeting with Telecom Commission chairman Anil Kumar next week to plead for a deferment in view of the unexpected project delays due to unforeseen problems. Setting up and expansion of network by all the six licensees has been hampered due to several factors beyond their control, they have pointed out.

The operators have demanded ironing out of all obstacles by setting up of an inter-ministerial group to collectively look into the problems being faced by them and formulate a coordinated approach.

Sources told The Financial Express that the basic operators are unlikely to move court in case the deferment is not granted by the government.

It is not clear if there will be any defaulters asthe operators do not seem prepared to forfeit their bank guarantees. Most operators are likely to deposit the fees within the next fortnight even if the government does not accede to their demand.

Meanwhile, the Department of Telecommunications (DoT) has sent a customary reminder to all six operators to pay up. Though DoT has not threatened that it will go to the extent of encashing the bank guarantees in case fees are not paid till the end of this month, it has interestingly asked for the amount of the guarantees to be raised.

According to Association of Basic Telecom Operators (ABTO), the six licence holders will be investing nearly Rs 27,000 crore in the licence fees alone over the next 15 years. The investment in building the network infrastructure is likely to exceed Rs 50,000 crore in the same period. In the first year of operation, infrastructure development worth about Rs 1,500 is being undertaken by them.

As license fees comprises nearly 40 per cent of the project cost, the deferment will easethe burden on the operators and make the projects more financially viable. This one year can be utilised by them to start their services and begin earning some revenue, ABTO has said.

The operators are seeking an extension in the license period in order to effect financial closure. With the present license fee and other cost structures, most basic telephony projects will break even between fifth and eighth years. Banks and financial institutions (FIs) are therefore unsure about how long it will take them to recover their loans.

They do not perceive the projects as being viable in the short timeframe of five years available under the license period. Uncertain international market conditions have also prevented financial closure as banks demand political risk coverage, the operators have pointed out.

While huge investments and long gestation periods were taken into account before the bidding, the unexpected delays from various quarters have made the plans of basic operators go awry. Most of the projectsare far behind schedule, with only Bharti Telecom having had started services in Indore, the only town of the entire Madhya Pradesh circle it has the license for.

Even as it launches the service in Bhopal on October 9, and later, in Jabalpur, Bharti Telecom will not be able to provide inter-connectivity for some more time as it faces distance restrictions on laying cables between the cities. Laying of cables along the highway was delayed by almost four months and the clearance was received in August only. Sources said as a result Bharti had got a paltry 3,000 customers, instead of the projected 50,000 within the first year.

Reliance Telecom too is facing similar problems in providing for an early connectivity between Jamnagar, the first Gujarat city where its service is expected to commence, and Gandhinagar, Ahmedabad, Surat and Baroda, sources added. The company is awaiting permission for laying cables across 600 km in the state. Essar, too has faced similar problems.

In fact, most projects have beenat a virtual standstill since February this year when the ministry of surface transport slapped an additional license fees for digging along the highways.

Similar delays have occurred because of the ministry of forests and municipal authorities disallowing digging and laying of cables passing through their land.

While the government has announced its intention to fix the charges payable to MoST at Rs 5,000 per km as against Rs 75,000 levied by the department, the licensees rue that the decision is yet to be implemented in the shape of an order so that work could take off. It is estimated that the operators are losing close to Rs 32 lakh per day due to delays in permission, thus affecting their viability.

They have also protested against the Rs 25,000 per km bank guarantee towards road reinstatement charges and have called for it to be converted into a rolling fund. As the operator finished repairing the road after laying cables, the same money could be carried forward. Operators point out that even DoT,which never had to pay such a fund, has supported this contention.

ABTO has also blamed the long time taken in rollout of projects on delays in permissions from a plethora of departments and bodies and the reluctance of the financial institutions and banks in funding these projects.