Telecommunication licences

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CA. HARISH AGARWAL (Querist)
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17 May 2012 Hello,

Can anyone tell me what is the procedure to get telecommunication licence to operate as a telecome company in india.

What all licences be required and the procedure to obtain them.

Thanking you

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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17 May 2012 please find enclosed herewith the notification & guidelines in this regards please read carefully:

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NO: 842-352/2000-VAS
GOVERNMENT OF INDIA
MINISTRY OF COMMUNICATIONS
DEPARTMENT OF TELECOMMUNICATIONS
LICENSING CELL (VALUE ADDED SERVICE GROUP)
SANCHAR BHAVAN, NEW DELHI-110001

GUIDELINES FOR ISSUE OF LICENCE
FOR CELLULAR MOBILE TELEPHONE SERVICE

The New Telecom Policy’99 envisaged entry of more operators for Cellular Mobile Telephone Service (CMTS) in a service area based on the recommendations of Telecom Regulatory Authority of India. The Government has decided to award licenses for fourth operator for CMTS for most of the service areas in the country (as listed in Annexure-I) and also for filling up existing vacant slots (A & N-2, West Bengal–1).

Following are the broad guidelines for issue of Licence for provision of CMTS in India. These guidelines are only for the purpose of General information and do not constitute any legally binding commitment. The conditions of the tender document and license agreement should be properly read and understood by the bidder companies before submission of bids. The eligibility criteria and the structure of the bidding process is given in Annexure-II.

1. The bidder must be an Indian company, registered under the Indian Companies Act’1956.

2. The bidder company shall submit the required bid document separately for each Service Area by the due date(s) as prescribed in the tender.

3. The bidder company can apply for any number of service areas subject to fulfillment of all the conditions of entry.

4. The license for CMTS will be issued on non-exclusive basis, for a period of 20 years, further extendable by 10 years at one time at the discretion of licensing Authority on mutually agreed terms and conditions, for providing service within the territorial jurisdiction of licensed service area.

5. The total foreign equity in the bidder company must not exceed 49% at any time during the entire licence period. Investment in the equity of the bidder company by an NRI / OCB / International funding agencies will be counted towards its foreign equity. In this regard the bidder company shall submit a certificate from the competent authority to the effect that total foreign equity in the bidder company does not exceed 49%.

6. The bidder company shall submit, along with the application, the Roll Out plan. The bidder company shall also submit business plan along with its funding arrangement for financing the project.

7. The Cellular Mobile Service Provider (CMSP) will be bound to register the demand/request for mobile telephone connection from any person at any place in the licensed service area without any discrimination. The service provider shall be required to maintain a transparent, open to inspection, waiting list. The service provider shall be permitted to launch the service on commercial basis only after commencement of registration in the manner prescribed. Subscriber will be free to obtain the Mobile Terminal at his option from any source, subject to interface approval by TEC/TRAI or any agency authorised by DOT in this behalf.

8. The bidder company shall make its own arrangements for Right of Way (ROW). However, the Central Government may issue necessary notification conferring the requisite powers upon the licensee for the purposes of placing telegraph lines under Part III of the Indian Telegraph Act’1885. Provided that non-availability of the ROW or delay in getting permission / clearance from any agency shall not be construed or taken as a reason for non-fulfillment of the Roll-out obligations.

9. The bidder and promoters of bidder company should have a combined net-worth of amount indicated in Annex-II. The net-worth of only those promoters shall be counted who have at least 10% equity stake or more in the total equity of the company. Here networth shall mean as the sum total, in Indian Rupees, of paid up equity capital and free reserves. While counting Net-worth the foreign currency shall be converted into Indian Rupees at the prevalent rate indicated by the Reserve Bank of India as on the date of invitation of the bids.

10. The successful bidder will be required to pay one time Entry Fee based on the final bid before signing the Licence Agreement.

11. In addition to the Entry fee described above, the Licensee shall also pay License fee annually @ 17% of “Adjusted Gross Revenue” for the Metro cities & Telecom Circles (exception being 10% for Andaman & Nicobar Circle) as Revenue Share generated from the Service in accordance with the procedure prescribed in the License Agreement document. This licence fee will now be applicable for both existing and new operators.

The above License Fee as Revenue share includes rent for the license and also contribution towards (i) USO, (ii) R&D, Administration and Regulation and (iii) 2% revenue share towards WPC Charges covering royalty payment for the use of cellular spectrum of upto 4.4 MHz + 4.4 MHz and License fee for Cellular Mobile handsets & Cellular Mobile Base Stations and also for possession of wireless telegraphy equipment as per the details prescribed by Wireless Planning & Coordination Wing (WPC). Any additional band width, if allotted subject to availability and justification shall attract additional license fee as revenue share (typically 1% additional revenue share if Bandwidth allocated is upto 6.2 MHz + 6.2 MHz in place of 4.4 MHz + 4.4 MHz. In this case the license fee to be charged shall become 18% in place of 17% and 11% in place 10% respectively). This component of license fee towards WPC charges for fee/royalty payment for use of spectrum is subject to review by WPC Wing from time to time.

Further, royalty for the use of spectrum for point to point links and access links (other than Cellular Service Spectrum) shall be separately payable as per the details and prescription of Wireless Planning & Coordination Wing. The fee/royalty for the use of spectrum /possession of wireless telegraphy equipment depends upon various factors such as frequency, hop and link length, area of operation etc. Authorization of frequencies for setting up Microwave links by Cellular Operators and issue of licenses shall be separately dealt with WPC Wing as per existing rules.

12. The bidder company shall submit Financial Bank Guarantee (FBG) of amount equal to Rs. 50, 25 and 15 Crores for category ‘A’ ‘B’ & ‘C’ service areas before the date of signing the licence agreement in the prescribed Proforma given in the Licence Agreement. Initially, FBG shall be valid for a period of one year and shall be renewed from time to time for such amount as may be directed by the Licensor. The bidder shall also submit Performance Bank Guarantees (PBG) of amount equal to Rs. 20, 10 and 2 Crores for category ‘A’ ‘B’ & ‘C’ service areas as prescribed in the license agreement before signing the license.

13. The Cellular Mobile Telephone Service refers to transmission of voice or non-voice messages over LICENSEE’s Network in real time only. SERVICE does not cover broadcasting of any messages voice or non-voice. The subscriber has to be registered and authenticated at the network point of registration and approved numbering plan shall be applicable. Roaming of Cellular subscribers in other service providers Networks is permitted.

14. Licensee shall make its own arrangements for all infrastructures involved in providing the service and shall be solely responsible for installation, networking and operation of necessary equipment and systems, treatment of subscriber complaints, issue of bills to its subscribers, collection of revenue, attending to claims and damages arising out of his operations.

15. Additional licenses may be issued from time to time in future also without any restriction on the number of operators.

16. LICENSEE shall be free to carry his own subscribers’ traffic within his own service area.

17. Direct Interconnectivity among all service providers in a service area has been permitted for terminating traffic of each other subject to any regulations issued from time to time by Telecom Regulatory Authority of India (TRAI) under TRAI Act, 1997 as amended from time to time. Interconnection among Operators shall be as per mutual agreement between them.

18. Interconnection between the networks of different service providers shall be as per national standards of CCS No.7 issued from time to time by Telecom Engineering Centre (TEC), and also subject to technical feasibility and technical integrity of the Networks and/or as directed by TRAI from time to time.

19. The Cellular Service Licensee may enter into suitable arrangements with other service providers to negotiate Interconnection Agreements whereby the interconnected networks will provide the following:

(a) To connect, and keep connected, to their Applicable Systems,
(b) To establish and maintain such one or more Points of Interconnect as are reasonably required and are of sufficient capacity and in sufficient numbers to enable transmission and reception of the messages by means of the Applicable Systems,
(c) To meet all reasonable demand for the transmission and reception of messages between the interconnected systems.

20. The Cellular Service Licensee shall for the purpose of providing the service install own equipment so as to be compatible with other service/ Access providers’ equipment to which the cellular service licensee’s Applicable Systems are intended for interconnection.

21. Licensee shall use any type of network equipment, including circuit and/or packet switches, that meet the relevant International Telecommunication Union (ITU)/ Telecommunication Engineering Centre (TEC) standards.

22. Any digital technology either once already validated by TEC or having been used for a customer base of one lakh or more for a continuous period of one year anywhere in the world, shall be permissible for use regardless of its versions. A certificate from the manufacturers about satisfactory working for a customer base of one lakh or more over the period of one year, shall serve the purpose in this regard.

23. The frequencies shall be assigned by WPC from the designated bands prescribed in National Frequency Allocation Plan - 2000. (NFAP-2000). Appropriate frequency spots in GSM band of 890-915 MHz paired with 935-960 MHz will be assigned to operators selected for vacant slots and 1710-1785 MHz paired with 1805-1880 MHz will be assigned to fourth cellular operator. A cumulative maximum of upto 4.4 MHz + 4.4 MHz will be permitted. Based on usage, justification and availability, additional spectrum upto 1.8 MHz + 1.8 MHz making a total of 6.2 MHz +6.2 MHz, may be considered for assignment, on case by case basis, on payment of additional license fee. The frequencies assigned may not be contiguous and may not be same in all cases, while efforts would be made to make available larger chunks to the extent feasible.

24. The Cellular Service Licensee shall comply with any direction on interconnection regulations issued by the TRAI under the TRAI Act, 1997 as amended from time to time.

25. Licensee can appoint Agents/servants for provision of service with a proviso that all responsibilities for ensuring compliance of terms & conditions of the licence shall vest with the Licensee. However, the licensee is not permitted to grant any sub-license.

26. The Cellular Service Licensee shall operate and maintain the licensed Network conforming to Quality of Service standards to be mutually agreed between the service providers in respect of Network-Network Interface, subject to such other directions as the competent authority may give from time to time.

27. In the interests of security, suitable monitoring equipment as may be prescribed for each type of system used will be provided by the licensee for law-ful interception by the security agencies.

28. The charges for access or interconnection with other networks shall be based on mutual agreements between the service providers subject to any regulations issued from time to time by TRAI under TRAI Act, 1997, as amended from time to time.

29. The network resources including the cost of upgrading/ modifying interconnecting networks to meet the service requirements will be paid for by the interconnection seeker, subject further to any directions from the competent authority from time to time.

30. It shall be mandatory for Cellular Service providers to provide interconnection to NLD service providers whereby the subscribers could have a free choice to make inter-circle/international long distance calls through NLD service provider. For international long distance call, the cellular service operator shall access international long distance operator through national long distance operator only.

31. Resale of business / assignability/transferability of licence by one network owner to another shall be permitted subject to prior written consent of the Licensor which shall be granted after ensuring the conditions in respect of net worth, paid up equity and in accordance with other terms & conditions, procedures prescribed in Tripartite Agreement, if duly executed amongst Licensor, Licensee and Lenders. However, such permission shall be granted only after ensuring that competitiveness in the service area is not compromised.

32. The Licensee shall not normally employ bulk encryption equipment in its network. However, if any encryption equipment is used and connected to the Licensee’s network, then it should have prior evaluation and written approval of the Government.

33. The LICENSEE shall provide necessary facilities depending upon the specific situation at the relevant time to the Government to counteract espionage, subversive act, sabotage or any other unlawful activity. The LICENSEE shall make available on demand to the agencies authorized by the LICENSOR, full access to the switching centers, transmission centers, routers etc. for technical scrutiny and for inspection, which can be visual inspection or an operational inspection. All foreign personnel likely to be deployed by the LICENSEE for installation, operation and maintenance of the LICENSEE’s network shall be security cleared by the Government of India prior to their deployment. The security clearance will be obtained from the Ministry of Home Affairs, Government of India, who will follow standard drill in the matter. The LICENSEE shall ensure protection of privacy of communication and ensure that unauthorized interception of messages does not take place.

34. LICENSOR shall have the right to take over the SERVICE, equipment and networks of the LICENSEE or revoke/terminate/suspend the LICENCE either in part or in whole of the Service area in the interest of national security or in case of emergency or war or low intensity conflict or any other eventuality in public interest as declared by the Government of India. Provided any specific orders or direction from the Government issued under such conditions shall be applicable to the LICENSEE and shall be strictly complied with. Further, the LICENSOR reserves the right to keep any area out of the operation zone of the service if implications of security so require.

35. LICENSOR reserves the right to modify these conditions or incorporate new conditions considered necessary in the interest of national security, public interest and for proper conduct of telegraphs.

36. LICENSEE will ensure that the Telecommunication installation carried out by it should not become a safety hazard and is not in contravention of any statute, rule or regulation and public policy.

37. The LICENSEE shall take measures that prevent the objectionable, obscene, unauthorised or any other content, messages or communications infringing copyright, intellectual property etc., in any form, from being carried on his network, consistent with the established laws of the country. Once specific instances of such infringement are reported to the LICENSEE by the authorised agencies, the Licensee shall ensure that the carriage of such material on his network is prevented immediately. The LICENSEE is obliged to provide, without any delay, tracing facility to trace nuisance, obnoxious or malicious calls, messages or communications transported through his equipment and network. Any damages arising out of default on the part of LICENSEE in this regard shall be payable by the licensee.

38. In case any confidential information is divulged to the LICENSEE for proper implementation of the Agreement, it shall be binding on the Licensee and its employees and servants to maintain its secrecy and confidentiality.

39. The Interconnection Tests for each and every interface with any Service Provider may be carried out by mutual arrangement between the Licensee and the other party involved. The Interconnection Tests schedule shall be mutually agreed. Adequate time, not less than 30 days, will be given by the Licensee for these tests. Service will be commissioned after obtaining clearance from licensor after successful completion of interconnection tests.

40. The LICENSOR or its authorised representative shall have right to inspect the sites used for extending the Service. The LICENSOR shall, in particular but not limited to, have the right to have access to leased lines, junctions, terminating interfaces, hardware/software, memories of semiconductor, magnetic and optical varieties, wired or wireless options, distribution frames, and conduct the performance test including to enter into dialogue with the system through Input/output devices or terminals. The LICENSEE will provide the necessary facilities for continuous monitoring of the system, as required by the Licensor or its authorised representative(s). The LICENSOR will ordinarily carry out inspection after reasonable notice except in circumstances where giving such a notice will defeat the very purpose of the inspection.

41. Licensee shall independently provide all emergency and public utility services to its subscribers, including directory information services with names and address of subscribers.

42. The detailed terms and conditions applicable to the licence for cellular service will be given in the Licence Agreement annexed with the Tender document.

43. DOT reserves its right to reject any or all bids without assigning any reason.

44. Prospective bidders shall get an opportunity to seek clarification on any of issues, if any, during a pre-bid conference.

45. It has been decided that all Cellular Operators shall be permitted to set up ‘Mobile Community Phone Service’ by making available the use of the handset to members of the public who do not own a handset of their own. Providers of this service are required to display prominently the tariff and make suitable arrangements for generating bills for the consumers for use of the service which shall have two components – one, airtime tariff for the mobile leg of the call and the other, PSTN tariff for the fixed leg, both of which would be separately specified.

ANNEXURE-I

Service Areas for Cellular Mobile Telephone Service are categorized as category A, category B and category C service areas as below:

S.No. Service Area Category No. of
Licenses to
be awarded

(Metro Cities)

1. Mumbai (Local areas served by Mumbai, New A 1
Mumbai and Kalyan Telephone Exchanges).

2. Calcutta (Local area served by Calcutta A 1
Telephone District).

3. Delhi (Local areas served by Delhi, Ghaziabad, A 1
Faridabad, Noida and Gurgaon Telephone Exchanges)

4. Chennai (Local area served by Chennai Telephone A 1
District, Maraimalai Nagar Export Promotion
Zone (MEPZ), Minzur and Mahabalipuram exchanges).

(Telecom Circles)

5. Andaman & Nicobar C 3
(includes 2 vacant slots)

6. Andhra Pradesh A 1

7. Bihar (including Jharkhand) C 1

8. Gujarat A 1

9. Haryana (Except the local areas served by B 1
Faridabad and Gurgaon Telephone Exchanges)

10. Himachal Pradesh C 1

11. Karnataka A 1

12. Kerala B 1

13. Madhya Pradesh (including Chhatisgarh) B 1

14. Maharashtra (Except the local areas served by A 1
Kalyan Telephone Exchange)

15. Orissa C 1

16. Punjab B 1

17. Rajasthan B 1

18. Tamilnadu (Except local areas Served by A 1
Maraimalai Nagar Export Promotion Zone
(MEZP), Minjur and Mahabalipuram Telephone
Exchanges).

19. Uttar Pradesh-West B 1
(Entire area covered by Western Uttar Pradesh
including Uttaranchal with the following as its
boundary district towards Eastern Uttar Pradesh: -
Pilibhit, Bareilly, Badaun, Etah, Mainpuri and Etawah.
(Except the local areas Served by Ghaziabad & Noida
Telephone Exchanges)

20. Uttar Pradesh –East B 1
(Entire area covered by Eastern Uttar Pradesh
with the following as its boundary districts towards
Western Uttar Pradesh: - Shahjahanpur, Farrukha-
bad, Kanpur and Jalaun).

21. West Bengal B 2
(includes 1 vacant slot)

Note:
(i) The Service Area for the licence(s) to be awarded shall be same as those of existing licences of cellular service. Reorganization of Telecom Circles or change of Local Area, if any, during the interregnum after the grant of the said licences to exiting Operators will not have any effect on the Service Area of cellular service Licence.
(ii) The above service areas refer to Telecom Service Area Units (Telecom Circle Service Areas or Metro City Service Areas) and not the State geographical areas.

ANNEXURE-II

THE BIDDING PROCESS:

1. Eligibility Criteria & General Conditions:

(i) The bidder must be an Indian Company registered before the date of submission of bid under Indian Companies Act 1956. The total foreign equity should not exceed 49 % of the total paid-up equity of the company. The management control of the company shall lie in the Indian hands for the complete duration of license.

(ii) The minimum net-worth of the bidder company and its promoters (networth of only such promoters having not less than 10% share in the equity capital of the bidder company shall be added) and paid up equity capital of the bidder company should be atleast as below:

Paid up Equity capital of the Bidding Company. Service Areas (one or more in each category) for which bid can be submitted.
3 Crores
5 Crores
10 Crores C
B and C
A, B and C

Note: A bidder company, which meets the minimum requirement of paid up equity for a service area of one category, may bid for any number of service areas of that or lower category.

Net-worth Total Minimum Net-worth required
Rs. 30 Crores for each Category C Service Area
Rs. 50 Crores for each Category B Service Area
Rs. 100 Crores for each Category A Service Area 100 X+50 Y+30 Z where X,Y & Z is respectively the Number of A, B & C Service Areas bided for

(iii) A promoter company cannot have stakes in more than one Bidder Company for the same service area.

(iv) The existing licensees cannot bid for the same service area.

(v) The bidder must comply with the technical specifications, commercial, financial and operating conditions as laid down by the licensor.

(vi) There shall be no restriction on number of licenses that can be awarded to a bidder company.

(vii) Minimum roll-out obligation: In Telecom Circles, atleast 10% of the District Headquarters (DHQs) will be covered in the first year and 50% of the District Headquarters will be covered within three years of effective date of License. The licensees shall also be permitted to cover any other town in a District in lieu of the District Headquarters. Coverage of a DHQ/town would mean that at least 90% of the area bounded by the Municipal limits should get the required street as well as in-building coverage. In Metros, 90% of the service area shall be covered within one year of the effective date. The District Headquarters shall be taken as on the effective date of license.

(viii) The bidder company and/or it s promoters should have experience in telecom sector.

2. Pre-Qualification Round: The bidders shall be pre-qualified if they meet the prescribed eligibility criteria such as, Financial strength, minimum roll out obligation, technical plan, business plan and other conditions as specified in the Tender Document Earnest money Bank Guarantee (EMBG) shall be returned to the bidders who fail in the pre-qualification round. No weightage shall be attached to the pre-qualification criteria.

3. Financial Bidding:

(i) The bidding process shall be structured as “Informed Ascending Bidding Process.” The pre-qualification bid as well as the first Financial Bid with EMBG will be submitted by the bidders in separate sealed covers. The pre-qualification Bid and Financial Bids of pre-qualified bidders as also Financial Bids in every subsequent round of financial bidding shall be opened in the presence of bidders’ representatives, who should carry a letter of authority from the bidder company authorising them to attend the bid opening and shall be made public.

(ii) The highest pre-qualified offer in the first financial bid shall be treated as ‘Reserve Price’ for subsequent round of bidding. If there are Four or more pre-qualified bidders, excepting the lowest bidder others will qualify for the second round of financial bidding. In case, there are less than four pre-qualified bidders, all will qualify for second round of financial bidding.

(iii) The successful bidders in the first round of financial bidding shall submit a Second Financial Bid for the second round of financial bidding, the bid amount to be quoted in this round will have to be equal to more than the ‘Reserve Price’. The bidder who do not bid equal to or more than the ‘Reserve Price’ shall be disqualified for the further round of bidding. Bidders will, however not be permitted to reduce the bid amount from their financial bid in the first round; in the event of such happenings his EMBG shall be encashed and earnest money shall be forfeited.

(iv) All the bidders who have quoted more than the ‘Reserve Price’ in the second round of financial bidding will be short-listed. If there are three or more such short-listed bidders, excepting the lowest bidder others will qualify for the third round of financial bidding. In case, there are only two short-listed bidders, both will qualify.

In case, there is only one short-listed bidder, there will be no third round of bidding.

(v) The bidders, who qualify for bidding for the third round, shall be required to submit the third and conclusive financial bid. The highest bidder of the third round financial bidding will be declared successful for grant of license.

The successful bidder shall deposit atleast 20% of the bid amount by the close of the office hours on the next working day without waiting for a formal demand from the licensor in this regard. The balance 80% of the bid amount must be paid within 10 days of the final bid opening.

(vi) In case the successful highest bidder does not pay the due amount of 20% as above within the given time, his EMBG shall be encashed and the amount of EMBG shall be forfeited and the said bidder will be dis-qualified from the bidding process for license of the concerned service area. In case the said bidder pays 20% of the bid amount as above within the given time but subsequently backs out and does not pay the balance amount of the quoted entry fee as well as sign the license agreement by the prescribed date after fulfilling other requirements of furnishing FBG & PBG, then his EMBG shall be encashed and the amount realized shall be forfeited, the 20% of the bid amount paid as above shall also be forfeited and the said bidder shall be dis-qualified from the bidding process for license of the concerned service area without any further notice. The successful bidders of the previous round without dropping any bidder shall be asked to bid once again for a further round of financial bidding and the highest bidder of this round will then be declared successful for grant of licence. This process shall continue till the license is awarded.

(vii) In case there is a tie in the conclusive round of bidding, the bidder who quoted higher amount in the previous round shall be declared successful for award of license.

4. In the service areas, where more than one licenses are to be awarded, the first highest bidder, next highest bidder and so on in the third and conclusive round shall be declared successful to sign the license provided that the difference in entry fee quoted between the highest and other such bidders is less than 25%. The higher of the bidders shall operate the service in 900 MHz band against the vacant slot(s) and lower of successful bidder in 1800 MHz as fourth operator. In case the difference in entry fee quoted by the successful bidders is lower than 25% than the highest bidder, there shall be another round of financial bidding from amongst successful bidders of previous round.

Example 1: West Bengal Circle – there are two licenses on offer.

The highest successful bidder will be granted first license for 900 MHz Band. The next highest bidder, if he has quoted entry fee within the range of 25% difference from the first highest bidder, will be granted second license for 1800 MHz Band; however, if the difference is more than 25% a further round of bidding will take place for which all the bidders who participated in the third round, except the one who is already successful for first license, will participate.

Example 2: Andaman & Nicobar Circle – there are three licenses on offer.

The highest successful bidder will be granted first license for 900 MHz Band. Such of the next two highest bidders, who have quoted entry fee within the range of 25% difference from the first highest bidder, will be granted second license for 900 MHz Band and third license for 1800 MHz band, in that order; however, if the difference is more than 25% a further round of bidding will take place for which all the bidders who participated in the third round, except for those who are already successful for the first one or two licenses, will participate.

5. In every successive round of bidding, the bidders can only exceed or retain the bid amount of previous bid, lowering their bid or backing -out unless ineligible will attract forfeiture of EMBG.

6. The Earnest Money Bank Guarantees as below shall be submitted by the bidders separately against each license bided for:

Category of Service Area Amount of EMBG

A 20 Crores
B 10 Crores
C 2 Crores

7. The Entry Fee, Financial Bank Guarantee and Performance Bank Guarantee shall be required to be submitted by the successful bidders prior to signing of the license agreement.

for more information Licence agreement link is:

http://www.dot.gov.in/cmts/cmtsindex.htm

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