Revenue sharing will not be implemented in cellular circles if one of the two service providers in a circle decides to stick to the existing licence-fee system.

Significantly, the five-year lock-in on promoters' shareholding has been imposed but will be implemented from the date of signing of the licence agreement.

The proposal to set up a Telecom Development Fund was, however, dropped by the Cabinet. DoT had proposed this fund for developmental schemes in rural, semi-urban and remote areas.

Talking to reporters after the Cabinet meeting, information and broadcasting minister Pramod Mahajan said licence holders would have to make an upfront payment of 15 per cent of licence-fee arrears by August 15 over and above the 20 per cent required to be paid under the existingguidelines.

The operators would have to furnish bank guarantees for the balance arrears and interest till the period all arrears were cleared. Relief by way of re-schedulement of payment of arrears will also be given.

The validity of the licence period will be extended to 20 years. The licences were originally issued for 10 years. The extension for effective date of licence period has been finally fixed at six months for basic and cellular service providers in non-metro circles.

The percentage of revenue sharing will be decided by the government based on the Telecom Regulatory Authority of India (Trai) recommendations. The same percentage will apply to the new licensees also.

However, an interim revenue share of 15 per cent of annual gross revenues is to be implemented till Trai gives its final recommendations. In view of the urgency of the matter, Trai would be asked to forward their recommendations on entry fee and revenue share for cellular and basic services latest by July 31, 1999.

The licencefee dues payable up to July 31, 1999, as per the existing license conditions would be treated as the entry fee. The balance of the total licence fee dues plus interest for the period up to July 31, 1999, is to be paid by January 31, 2000.

It has also been clearly stipulated in the package offer that the existing licensees would forego their duopoly rights and operate in the multipoly licensing regime if they choose to shift to the revenue-sharing arrangement.

Migration of value-added services from the present regime to NTP 99 will be committed on the basis of a similar package, modalities for which will be finalised by the communications ministry in consultation with Trai.