Kapil Sibal to meet telecom firm owners to end litigation

Mumbai: India’s communications minister Kapil Sibal said he has called for a meeting with owners of mobile-phone companies to help resolve law suits that’s resulted in a 95% drop in overseas investment in the sector.

add_main_imageSibal, who also oversees the law ministry, will meet the heads of the wireless phone companies in the next two weeks, he said in an interview broadcast by Bloomberg TV India on Monday.

Indian courts are hearing more than a dozen law suits from operators and the Department of Telecommunications over cases ranging from wrongful termination of licenses to purchases of mobile-airwaves beyond the legal limit. Foreign direct investment into the world’s second-largest telecom market shrank to $93 million in the first 10 months of the year ended 31 March, from $2 billion for the year-earlier period, according to government data, after the Supreme Court in February 2012 cancelled 122 licenses tied to India’s largest graft case.NextMAds

“I am going to listen to them as to where are the areas in litigation that needs to be attended to,” Sibal said. “We will be extremely constructive about fixing the problem.”

The cancellation of the licenses by the Supreme Court, citing corruption during their original allocation, led to the exit of Bahrain Telecommunications Co. and Emirates Telecommunications Corp. Companies including Russia’s AFK Sistema, Norway’s Telenor ASA, Tata Teleservices Maharashtra Ltd and Idea Cellular Ltd have filed law suits claiming their licenses were wrongfully terminated.

Lowest rates

Call rates in India remain among the lowest in the world. With 13 operators offering services to 863 million connections in the world’s second-most populous nation, price wars forced voice rates down to as low as ₹ 0.5 (0.9 cents) from as high as ₹ 16 in 1995.

“Part of the problem is the industry being at war with each other,” said Sibal in the interview. “Other problems are the bureaucracy and the state of the industry today is much worse than it ever was because of the huge debt that it has accumulated of about ₹ 2.5 trillion,” he said.

Foreign carriers are losing money in the world’s fastest-growing mobile-phone industry, after spending a combined $7 billion on Indian airwaves and networks.sixthMAds

Vodafone Group Plc last month said its application to renew licenses for second-generation wireless services in key Indian cities was rejected by the Department of Telecommunications. The carrier’s Indian unit filed a petition in February challenging the department’s decision to re-auction the licenses, which expire in 2014.

‘Sunrise sector’

Vodafone, the world’s second-largest mobile-phone service provider, is also waiting to resolve a $2.2 billion dispute with Indian tax authorities over the 2007 acquisition of Hutchison Whampoa Ltd’s Indian business.

Sunil Mittal and his Bharti Airtel Ltd were last year charged with acquiring more mobile-phone spectrum than the government allowed. Bharti said 19 March the company would fight the charges, calling it an attempt to tarnish its reputation.

The administration is attempting to ease rules for wireless phone companies. Prime Minister Manmohan Singh’s Cabinet approved a non-binding proposal that would start a conciliation process to resolve the tax dispute with Vodafone.

The government may clarify on acquisition rules for service providers as soon as this month. That could clear the way for consolidation, possibly halving the number of carriers and boosting profitability, said PricewaterhouseCoopers.