Indian GSM firms may withdraw legal suit

NEW DELHI: India's private cellular carriers may withdraw legal cases against the government and basic phone firms on hopes of getting compensation from the government, the Business Line reported on Wednesday.

The firms, which have invested more than $5.0 billion and lost over $2.0 billion due to heavy competition, had filed an appeal in the Supreme Court to delay the government's unified licensing policy for the sector which allowed basic phone firms to provide full mobility services in competition with them.

Earlier this month, the Court had set January 13 as the date to begin its final hearing on the long-running legal battle.

The paper, quoting unnamed sources in the booming industry, said the compensation package being worked out by the government could be in the form of lower revenue share.

Currently mobile firms pay between eight and 12 percent of their sales to the government as revenue share and are asking for more than $4.0 billion in compensation. The paper said this share could be cut to two-to-four percent.

T.V. Ramachandran, head of the Cellular Operators Association declined to comment on the news report.

India's flourishing mobile market has around 27 million users and the number is expected to surge to at least 100 million by 2005, making the sector one of the fastest growing markets globally.

Reuters