TDSAT asks telcos to explain ways to cover govt loss on 3G roaming

The TDSAT’s question followed the government’s submission that due to interim protection granted to the telecom firms, the government as well as the state-owned BSNL are suffering losses

New Delhi: The Telecom Dispute Settlement and Appellate Tribunal (TDSAT) on Thursday asked private operators, who are opposing the Department of Telecommunications (DoT) directive to scrap their third generation (3G) roaming pacts, to explain as to how they would compensate the government if they lose the case, reports PTI.

“If this petition is dismissed, is there any way the government can be compensated and (if then) how,” asked the TDSAT bench headed by justice SB Sinha.

The tribunal has sought their submissions by Friday, when the hearing resumes.

Meanwhile, senior counsel CS Vaidyanathan and Ramji Srinivasan representing Tata Teleservices suggested to the tribunal that “a separate licence fee could be paid” to DoT to compensate for its losses.

In an interim order on 24th December, TDSAT had directed the DoT not to take any coercive action against the operators for their 3G roaming pacts.

The TDSAT’s question followed the government’s submission that due to interim protection granted to the telecom firms, the government as well as the state-owned BSNL are suffering losses.

The operators contended that there would be no loss to DoT on the revenue front by the roaming pact as the telecom firms are paying licence fee to the government under the revenue-sharing mechanism.

Senior advocate Abhishek Manu Sighvi, representing Vodafone, said it does not require a new licence for providing 3G services in the circles where they have not bid.

Seeking continuation of the interim order, Mr Singhvi said the DoT’s roaming policy is licence-based, and not spectrum based, and all such bilateral pacts between operators for inter/intra-circle roaming are allowed.

This view was opposed by the additional solicitor general AS Chandiok, appearing for DoT, who submitted that intra-circle roaming was allowed for 800 MHz, 900 MHz and 1800 MHz bands of 2G spectrum, but not for 2.1 GHz of 3G.

He said that their licence conditions allow them roaming on 2G spectrum but not for 3G services and hence the pact among them was illegal.

Adding to it, additional solicitor general Vivek Tankha, appearing for BSNL, said that operators who have not even bid for 3G spectrum in certain circles are providing 3G services by illegally sharing spectrum and are taking away its subscribers.

Airtel, Vodafone, Idea, Aircel and Tata Tele moved TDSAT against DoT’s 23rd December directive to stop roaming on 3G bandwidth within 24 hours.

This was challenged by the operators before the tribunal within few hours and next day on 24th December, TDSAT gave them interim protection.

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Govt goes ahead to allow direct import of jet fuel by airlines

The sourcing of ATF through direct imports would lower the overall procurement cost for the airlines as sales tax varying from 4% to 30% in different states would be required to be paid only when local purchase was unavoidable

New Delhi: The government on Thursday moved forward to implement its decision to allow Indian carriers to directly import jet fuel, with the civil aviation ministry writing to the commerce ministry to take the necessary steps, reports PTI.

The decision was taken earlier this month at a meeting of a Group of Ministers on aviation, headed by finance minister Pranab Mukherjee, that the commerce ministry would permit direct import of aviation turbine fuel (ATF) “by or on behalf of Indian carriers directly as the actual user and on actual use basis,” officials said here.

The cash-strapped Indian carriers, particularly Kingfisher, have been demanding allowing of direct imports due to the high incidence of taxation on ATF by state governments which led its price to be 30% to 40% higher in India than in countries like Singapore, Japan, and those in the Gulf and in Europe.

However, the officials said the Indian carriers would have to make their own tie-ups with the suppliers having infrastructure to import ATF directly for their use.

The sourcing of ATF through direct imports would lower the overall procurement cost for the airlines as sales tax varying from 4% to 30% in different states would be required to be paid only when local purchase was unavoidable, they said.

The decision would also bring down the cost of working capital to the airlines, as suppliers’ credit on lower interest rates would become feasible, the officials said.

The civil aviation ministry had sent the letter to commerce ministry yesterday, they said.

Most of the Indian airlines owe substantial amounts to oil companies on account of jet fuel.

Air India owes over Rs4,170 crore to public sector oil companies in unpaid jet fuel bills, according to figures tabled in Parliament, while all other private carriers together have dues worth over Rs2,000 crore.

Flight schedules of airlines like Air India and Kingfisher have been disrupted on several occasions in the past few months due to these oil firms stopping ATF supplies due to non-payment of dues.

Following frequent disruption to flights, government recently asked the oil PSUs to extend the credit period to 90 days.

Since the days of Praful Patel, successive civil aviation ministers, including incumbent Ajit Singh, have written to the chief ministers of all states to bring down the rate of sales tax on ATF in order to make ATF cheaper for the Indian carriers.

However, most of the states have not responded favourably, the officials said.

They said the revenue from sales tax on ATF contributes only 0.5% to 2% of the total sales tax collection of the states.

But for the airlines, it is almost 40% of the total operational cost, imposing a heavy burden on the beleaguered companies.

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Irrational behaviour

Sentiments continue to play a huge role in the Indian market

The market has been in rally mode, rising by nearly 17% for the last six weeks and the Sensex is currently past 18,000. Foreign institutional investors (FIIs) seem to have discovered India all over again, betting more than a billion dollars on India in a jiffy. The sentiment is extremely strong, despite all the news and opinion of gloom and doom—from scams in India to problems in Europe to slow growth in the US. The latest corporate earnings haven’t been too spectacular either, yet the markets shot up. Why? Well, for starters, the Indian market was mildly undervalued in late December. At a Sensex of 15,200 the PE was 13.4.

With the New Year came a massive liquidity boost which caused sentiment to change overnight. Ben Bernanke, the chairman of US Federal Reserve announced that interest rates will be low as long as it is needed. This caused hedge funds and FIIs to pour money in risky assets such as emerging markets. Since the Indian market had underperformed grossly in 2011, it bounced back the most. Additionally, the European Central Bank (ECB) pledged support to keep the European Union alive and keep Greece in the Euro. Further, the Reserve Bank of India (RBI) cut in CRR by 0.5% to 5.5%. Investors assumed that interest rate cycle has peaked in India.

So what happed to all the gloom and doom stories in the media, the continuous lament about the lack of reforms and poor governance? The fact is stock markets are always sentiment-driven. It takes a few good or bad news to turn the market around, for better or worse. We all are well aware of the lack of policy initiatives from the government and its talks of “reforms”. These things come up in a bear market and disappear when a rally starts. People simply forget them, especially since the media is always looking for cause & effect and never highlight that short-term market movements have nothing to do with long-term issues like reforms. From early December 1996, the Sensex rallied more than 60% till August 1997, on some hope or the other. It fell after the Asian crisis but rallied again 45% from December 1998 to April 1999, on another set of misplaced hopes. After all, it is not “reforms” or governance that caused the Sensex to rise 80% in 2003.

The fact is, after a deep decline, investors only need the flimsiest of excuses to buy. This is exactly what has happened this time—as it has happened many times in the past. People forget all the time and the media, which shapes popular opinion, have no truck with history. Hence the surprise all around.

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