No need for subsidies, telcos tell government

No need for subsidies, telcos tell government
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First Published: Fri, Mar 09 2007. 12 10 AM IST
Updated: Fri, Mar 09 2007. 12 10 AM IST
More than half the Rs2,400 crore subsidy set aside by a state-run fund that supports telecom expansion in under-served markets will go unutilized, as several bidding companies say they do not need any financial support for the roll-out.
The universal service obligation (USO) fund was set up to encourage cellphone firms to operate services in rural areas.
In January, a two-part tender was invited from infrastructure and phone companies for the financial subsidy they needed to set up towers and run cellular services in 81 rural pockets or clusters.Bidders requiring the lowest amount of financial support were to be chosen.
The bids of companies such as Bharat Sanchar Nigam Ltd (BSNL), Bharti Airtel, Reliance Communications, Hutchison Essar, Idea Cellular, Aircel and Spice Telecom to run services on rent-free towers were opened on Wednesday.
State-owned BSNL has proposed it will run services without any financial subsidy in all 81 pockets, an executive with one of the bidders said.
Others such as Reliance, Hutchison Essar, Idea, Spice and Aircel have also made zero-subsidy bids in several pockets.Department of telecommunications officials running the bid refused details.
The zero-subsidy bids by the service companies indicate that they are willing to absorb the cost of putting up radio-equipment and base-stations in areas that were until now seen not lucrative.
In a parallel tender for setting up 7,800 towers spread over the rural areas in around 500 districts, BSNL, Reliance and Mumbai-based GTL Infrastructure have put in nationwide bids. Quipo Infrastructure and Essar Tower and Infrastructure were among those that participated with bids for smaller lots.
Subsidy sought by most bidders for putting up the towers were 40-60% of the Rs1,615 crore set aside by the USO fund, said an official at a second bidding company.
Under the USO fund’s scheme, a subsidy of up to Rs323 crore a year for five years was earmarked for setting up towers and power supply in the rural pockets.
Another Rs156 crore in annual support was set aside for operators willing to start services in these areas.
The department of telecommunications, which administers the USO fund, planned for three mobile phone companies running their radios on each tower.
After scrutiny of the service and tower bids, all qualifying bidders will be asked to submit final offers at or below Wednesday’s quotes, an official with the department’s USO fund division said. He did not wish to be identified.
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First Published: Fri, Mar 09 2007. 12 10 AM IST
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