A Government-appointed director on BSNL’s board has expressed reservations about the contract being inked by the company and its franchisees to provide Wi-Max-based broadband services. BSNL had granted letters of intent (LoIs) to Teracom, Take Solutions, Adishwar and Ampoules to be appointed as franchisees on a revenue sharing basis.
The nominee has said that the contract varied from the terms and conditions highlighted in the initial expression of interest, thereby making the business unviable.
“It is mentioned that the expression of interest after floating of the tender is a public document and the franchisees too have quoted the rates and made their business plans on these documents, so it is imperative that the clauses of the EOI be taken as the base reference and the agreement should not deviate in content,” said a note from the Government director.
One of the issues raised dealt with recovering spectrum cost from the franchisees. According to the draft agreement, the one-time spectrum charge was to be recovered through equated monthly instalments. In addition, the annual spectrum charges (one per cent of annual revenues) will be deducted from the revenue as pass-through cost.
The director has pointed out that the EOI has no provision for including the interest rate on the cost of spectrum. The EOI stated that the spectrum charges would be recovered from the franchisee at the rate of 4 per cent of total revenue.
“It is proposed that BSNL should formulate such terms and conditions so as to facilitate the use of spectrum for earning of revenue and for monetising the asset at the earliest. Asking for the entire cost of the spectrum perhaps will make the project unviable and a non-starter resulting in BSNL failing to earn adequate returns. The spectrum has been with BSNL for two years and has remained unutilised, therefore BSNL needs to launch the services on priority basis,” the note said.
