India Telecom Regulator Favors No Refund for Canceled Licenses

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India's telecom regulator plans to propose to the government that the license fees companies pay for services will continue to be non-refundable, indicating another setback for operators whose licenses are due to be revoked following a recent court order...

India's telecom regulator plans to propose to the government that the license fees companies pay for services will continue to be non-refundable, indicating another setback for operators whose licenses are due to be revoked following a recent court order.

India's Supreme Court on Feb. 2 ordered the scrapping of 122 mobile phone licenses issued without auction since January 2008 to eight companies, saying the allocations were rigged and underpriced. The affected companies have been allowed to continue operations until the order becomes effective after June 2. It has also directed the government holds a fresh auction of licenses.

The court order has put in jeopardy the billions of dollars that companies like Japan's NTT DoCoMo Inc., DCM -0.35% Telenor ASA TEL.OS +0.09% of Norway and Russia's AFK Sistema have invested in India. They had bought stakes in Indian companies after their local partners got licenses.

Analysts say the affected companies could either want a refund of what they had paid or have it adjusted against what they may need to pay in the new auctions.

But the Telecom Regulatory Authority of India, in a notice issued late Monday, said that, as under current rules, license fees can't be refunded.

It said that present conditions, "whereby [a] licensee can surrender its license by giving a notice of at least 60 calendar days in advance, shall continue to be applicable."

The regulator also said that it would recommend to the government that there is no need for any separate exit policy for incumbents after the Supreme Court order.

The regulator sought comments from stakeholders on its proposals by April 5. The government may or may not accept the proposals.