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Telecom Dept wants new penalty norms for telcos before auction

The Department of Telecom wants to have a new and more rational approach to penalty norms for telecom operators before the commencement of next spectrum auction.

'We want to have five things before the commencement of auction. Of these five, unified licence and FDI rules are already in place. The rest are calibration on penalties, mergers and acquisitions (M&A) guidelines and definitely auction related processes,' Telecom secretary MF Farooqui said.

Telecom Minister Kapil Sibal had earlier said that M&A guidelines would be announced after the EGoM's call on the matter. The Empowered Group of Ministers (EGoM), headed by Finance Minister P Chidambaram, is expected to decide on it in its meeting scheduled for 22 November.

Farooqui said the DoT is working on rationalising penalty rules and the draft should be ready by this month-end.

'The five things will bring a sense of hope and growth back to the industry,' he said. The Telecom Secretary, however, did not share details of new penalty rules, but said the DoT is considering TRAI recommendations.

The Telecom Regulatory Authority of India (TRAI) in April last year had recommended classifying penalty in two categories — minor and major. It had suggested imposition of a maximum penalty of up to Rs 25 lakh in case of minor violation and up to Rs 10 crore for a major violation.

The DoT has come under criticism from the industry for imposing maximum penalties of Rs 50 crore even for minor violations.

Sibal had said that when DoT imposes high penalty, telecom operators usually contest it before courts. This leads to delays in realisation of amounts. Telecom players have raised the penalty issue in open house discussions held by the Telecom Ministry.

Industry estimates suggest that the DoT has imposed total penalties of Rs 6,850 crore on telecom companies which include fines for minor violations like late submission of papers and absence of placards on mobile towers.
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