Telecom outsourcing deals under Trai lens

The Telecom Regulatory Authority of India (Trai) has started monitoring changes in the contractual agreements of operators to ensure that they do not adversely impact the annual licence fee earned by the government and follow licence conditions.

The government gets part of the revenue earned by operators as licence fee under the revenue-sharing agreement with operators.

The regulator is currently monitoring the restructuring deals of at least three key companies — Bharti Airtel's outsourcing agreements, Reliance Communications' dual company structure, and Tata Teleservices' contract with Virgin Mobile.

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Misra added, "New companies for the tower business are being formed, the assets are being transferred to them, a sharing formulation will come up and we want to understand what is the relationship that will develop (between the parent company and the tower company). We want to ensure that it does not affect the annual licence fee as various issues on transfer pricing come up."

Taking the example of the structure of the Reliance Anil Dhirubhai Ambani Group telecom business, Misra said it has two companies, one that owns the network assets and the other that is responsible for all the recovery receipts and billing.

"We are looking at who owns the subscriber, whether the billing was going in the name of the parent company or the contracted company with whom they have a relationship, what is the compensation being paid by the parent company to the second company and is that compensation realistic," Misra explained.

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