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FM radio cos may be allowed to re-apply under new norms

11-August-2004
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FM radio cos may be allowed to re-apply under new norms

There could be some respite for the bleeding private FM radio companies.

The Information and Broadcasting (I&B) Ministry is looking at the possibility of allowing the existing licence holders to surrender their licences and re-apply for the same metros under the new FM radio policy.

Highly placed Government sources said that during the second phase of FM radio privatisation, besides new cities and towns, additional frequencies in the existing metros could be made available to operators. Currently, the I&B Ministry is not in favour of migrating to a revenue-sharing regime from the existing licence fee regime but may look at other alternatives such as lowering the 15 per cent annual hike.

During the first phase of privatisation, the annual licence fees, varied from one metro to another with an in-built clause for a 15 per cent increase every year. "We do not have the wherewithal to scrutinise the financial accounts of these companies and the Government may lose substantial revenues due to migration. Hence, we are looking at alternatives to reduce the loss to the Government as well as help operators," said sources.

They also added that unlike the first round where the circles were allocated after an auctioning process, a tender process with a fixed floor price might be considered this time. "If the private FM companies feel that the terms and conditions under the new policy is more beneficial than the existing practise, they could surrender their existing licences and re-apply," they added.

The idea is to encourage entrepreneurs and even smaller business groups to get into the radio business. "We want to broadbase the business and want the entry conditions to be such that even entrepreneurs can drive growth," they said.

Meanwhile, the Telecom Regulatory Authority of India (TRAI) is expected to submit its final report on FM radio within this week. While the industry had sought hiking the foreign direct investment (FDI) limit to 26 per cent from the existing 20 per cent cap on foreign institutional investors (FIIs), Government sources said that this might not be possible. Also, whether or not to allow private radio companies to carry news and current affairs would have to be decided.

The private FM radio operators are waiting for the Government's decision. They were directed to pay up their licence fee dues, for a period of four months between April 29 and August 29, by the Telecom Disputes Settlement Appellate Authority (TDSAT). Instead of Rs 100 crore, the companies coughed up Rs 33 crore as licence fees for four months.

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