Indian Networks to Get $1.7 Billion From Handing BWA Licenses Back to the Government
Published on: 10th Jan 2014
By: Ian Mansfield
India's two state owned mobile networks are to receive a refund of Rs 11 000 crore (USD1.7 billion) and will be allowed to hand back the BWA licenses they were forced into buying in 2010.
When the BWA licenses were auctioned in 2010, the terms were understood to have stated that any license returned to the state, or confiscated for failure to meet regulatory requirements would be done without any compensation of the license fee paid.
However, it later turned out that the "no-refunds" policy was not explicitly stated in their license documentation, leaving open the option for the state-owned networks to surrender their licenses and get a refund.
In a statement, the government said that the objective of the decision is to provide financial support to the extent of one-time upfront charges paid for BWA spectrum for six service areas of BSNL and both service areas of MTNL on surrender of the spectrum.
BSNL will receive a refund of Rs. 6724.51 crore (US$1.08 billion), while MTNL gets Rs.4533.97 crore (USD731 million).
The government did not say what will happen to the licenses, but it can be presumed that they will be offered again at an auction as the refund knocks a sizable hole in the government finances.
During the 2010 auction, only Infotel secured nationwide coverage, so the licenses being handed back may be desirable to the other bidders who lost out during the original auction.