India: Foreign Investment Norms Eased And 'One Nation – One License'’ Becomes A Reality

Last Updated: 20 September 2013
Article by Kartik Maheshwari, Vivek Kathpalia and Rakhi Jindal

The Department of Telecom, Ministry of Communications and Information Technology, ("DoT") released the much awaited Unified License, paving the way for the implementation of DoT's One Nation - One License plan. The Unified License seeks to consolidate license terms for different telecom services. The Unified License has also introduced certain new concepts and clarified some key areas which need to be kept in mind. Notably, spectrum has been officially delinked from the license, cross holding has been prohibited and 3G roaming pacts have been recognised.

This change in policy was accompanied by the Government of India ("GoI") fulfilling a long standing demand of the industry, i.e. allowing 100% foreign investment in the telecom sector.

One crucial aspect which is yet awaited is the policy on mergers and acquisitions in the telecom sector. The telecom sector is quite fragmented and consolidation is considered crucial at this stage. We hope to see consolidation activity pick up as soon as the M&A guidelines are notified.

We now discuss the changes in the FDI policy and some of the key provisions of the Unified License.


The GoI through an amendment to its Foreign Direct Investment ("FDI") policy has allowed 100% foreign investment in the telecom sector as opposed to the previous limit of 74%. FDI upto 49% continues to be under the automatic route, and any investment above 49% (upto 100%) will require prior approval from the Foreign Investment Promotion Board.

100% FDI is expected to give an impetus to funding, consolidation, restructuring and exits for telecom operators and their shareholders including private equity investors. It is interesting to note that India is one of the few countries that has permitted 100% foreign ownership of telecom operators.


The DoT has released the final version of the license agreement for Unified License along with the guidelines for grant of Unified License and migration of existing telecom licenses into the Unified License regime. The Unified License is replacing the old regime of a telecom operator applying for separate licenses for separate services proposed to be offered by bringing all the major telecom services under one license.

The National Telecom Policy ("NTP") is the main policy document that lays down the broad objectives that are sought to be achieved so as to align efforts of policy makers, stakeholders and law makers to achieve a common goal. The latest version of the NTP, i.e. NTP 2012 lays down creation of One Nation - One License across services and service areas as one of its main objectives. With respect to the Unified License, NTP 2012 specifically provides as follows:

"To move towards Unified Licence regime in order to exploit the attendant benefits of convergence, spectrum liberalisation and facilitate delinking of the licensing of Networks from the delivery of Services to the end users in order to enable operators to optimally and efficiently utilise their networks and spectrum by sharing active and passive infrastructure. This will enhance the quality of service, optimize investments and help address the issue of the digital divide. This new licensing regime will address the requirements of level playing field, rollout obligations, policy on merger & acquisition, non-discriminatory interconnection including interconnection at IP level etc. while ensuring adequate competition."

In the following paragraphs we shall discuss the scheme of the Unified License, some important provisions of the Unified License and some salient changes with respect to the provision of specific telecom services.


Services Offered: The Unified License includes within its ambit the following services:

  • Access Service;
  • Internet Service;
  • National Long Distance Service ("NLD Service");
  • International Long Distance Service ("ILD Service");
  • Global Mobile Personal Communication By Satellite Service ("GMPCS Service");
  • Public Mobile Radio Trunking Service ("PMRTS Service");
  • Commercial Very Small Aperture Terminal Closed User Group ("Commercial VSAT CUG Service");
  • INSAT Mobile Satellite System-Reporting Service ("INSAT MSS-R Service"); and
  • Resale of International Private Leased Circuit Service ("Resale of IPLC Service").

The Unified License is split into two portions; part one contains general conditions such as security and technical conditions which is applicable to all service categories and part two contains specific conditions applicable to specific services.

Application: The Unified License is a sort of umbrella document which all companies seeking to provide telecom services will need to obtain. Apart from this, the company would also need to obtain separate authorization from the DoT for specific services which the company wishes to provide. One company can have only one Unified License, but the same company can apply for authorisation for more than one service and / or service area subject to fulfilment of all the conditions of entry, simultaneously or separately at different times. At the time of applying for Unified License, the applicant has to apply for authorisation of at least one service that is listed in the Unified License.

Tenure: The Unified License shall be issued on non-exclusive basis for a period of 20 years. The license may be renewed by the DoT for an additional period of 10 years at a time upon request of the service provider, if made during the 19th year of the license period. Where any additional service has been authorized during the tenure of the license, the tenure of such additional service shall be co-terminus with the license.


In order to ensure the smooth transition of licensees from their existing licenses to the Unified License regime, the guidelines for grant of Unified License lay down the manner for migration of the existing licenses. Licenses of any of the existing operator shall be eligible to migrate to the Unified Licenses with any number of additional services, however, in such a case, the operator needs to migrate all of its existing licenses.

Currently, migration has been made completely voluntary until such time that the existing license of operators expires. All renewals / extension of license will be made only under the Unified Licensing regime. However, it would be mandatory for an existing licensee to migrate to Unified License regime under following conditions:

  1. Expansion of scope of the license / service to include any additional service or any service area;
  2. Merger or acquisition between entities who have not migrated to the Unified License. In such a case, the merged entity must migrate to Unified License regime.

On migration, Unified License shall be valid for a period of 20 years from the effective date of issuance of the Unified License, regardless of the validity period of the license already held;

The Entry fee applicable for migration of all existing licenses to Unified License shall be equal to the entry fee laid down for a new Unified License. This entry fee is applicable for all services / licenses other than for an Internet Service Provider with BWA spectrum. This exception appears to have been made after the DoT's clarification 1 allowing the carriage of voice over the BWA Spectrum, following which an additional fee equal to the difference between the entry fee for UASL (Voice Service Providers) and entry fee paid for ISP license shall be payable in addition to the entry fee as applicable for a new Unified License.


  • De-linking Spectrum from the License: In line with the recommendations of the Supreme Court in its judgment 2 whereby it canceled 122 telecom licenses, the Unified License has un-bundled spectrum and the license. Under the earlier regime, spectrum was considered as an integral part of the license, whereas, under the Unified License, spectrum will now have to be separately acquired once a license has been acquired. This change has been in line with NTP 2012 which suggested that spectrum should be made available at a price determined through market related processes, rather than being bundled with the License.
  • Entry Fee: While the Unified License mandates that separate entry fees must be paid according to the services proposed to be offered, the Unified License has imposed an overall cap on the entry fees payable for multiple services under the Unified License, at INR 15 Crores.
  • License Fees: Important changes have been brought about with respect to license fees.

    1. Change in calculation of license fee: In the earlier regime, differential percentage of the Adjusted Gross Revenue ("AGR") was to be paid as license fees on the basis of the circle in which services were offered. The Unified License now mandates a flat license fee of 8% of the AGR, inclusive of Universal Service Obligation which is presently 5% of AGR. However, from the second year of the effective date of service authorization, the license fee shall be subject to a minimum of 10% of the Entry Fee of the respective authorized service and service area.
    2. Presumptive AGR: Presumptive AGR is a concept that has been made applicable to all spectrum holders and places a premium on spectrum even where the spectrum holder does not utilize the spectrum made available to them. This move appears to be recognition by the DoT of spectrum as a scarce national resource and to that extent an attempt has been made to ensure that only serious players enter and operate in this industry. A spectrum holder will now be required to pay license fees in the form of a percentage of notional revenues or a percentage of the actual revenues, whichever is higher. Notional revenue which is essentially a minimum amount of revenue for this purpose will be calculated in accordance with the relevant provisions of the Notice Inviting Application document of the auction of spectrum or conditions of spectrum allotment depending on the service and service area. Therefore, unlike the previous regime whereby license fee was determined on the basis of revenue generated by an operator, spectrum holders will now have to pay a minimum pre-determined percentage as license fee or actual AGR or the minimum license fee whichever is higher. Further, this move also appears to be an attempt by the DoT to speed out rollout of services by spectrum holders since they will now have to pay license fees regardless of the actual revenue earned and will reduce hording of spectrum.
  • Prohibition on Cross Holding: The old licensing regime allowed one licensee to hold an equity interest of up to 10% in another licensee in the same service area - this concept was known as "Cross Holding". Under the Unified License, this de-minimis exemption has been done away with. Licensees are no longer allowed to hold any equity interest (directly or indirectly) in any other licensee which provides services in the same service area. The Unified License provides a window of one one year for entities to comply with this provision from the date of migration to the Unified License. This provision may have been included to prevent cartelisation in light of the allegations levelled against telecom operators for forming cartels in the last round of auction of spectrum by the Comptroller and Auditor General of India (CAG) 3. This particular provision will directly impact licensees such as Vodafone and Bharti Airtel since most of their licenses are due for renewal in the next year following which their licenses would only be renewed under the Unified Licensing regime and in such a situation Vodafone would need to divest its minority stake in Bharti Airtel 4.
  • Transfer of license: In the section of restriction on 'transfer of license', there is a clarification that has been made with respect to court approved merger and acquisitions which provides that any scheme of amalgamation or restructuring filed with the court must be drafted in a manner so that such amalgamation or restructuring shall be effective only after the written approval of the DoT for such transaction. It should be noted that there have been various rounds of litigation wherein the DoT's role has been challenged vis-à-vis approval from the Courts in the case of a court approved merger 5. As such this clarification makes clear the DoT's position in this issue. However, there is no clarity on when the DoT will need to be approached for such approval. It is not clear whether such approval may be sought simultaneously with the court approval process or if one would need to seek such approval from the DoT after the completion of the court approval process.
  • Dispute Resolution: With respect to the appropriate forum for settlement of any disputes under the Unified License, it has now been clarified that all disputes which lie outside the domain of the Telecom Disputes Settlement Appellate Tribunal ("TDSAT") will lie in the jurisdiction of competent Courts in the National Capital Territory ("NCT") of Delhi only. The TDSAT currently has jurisdiction to adjudicate disputes between (i) a licensor and a licensee; (ii) two or more service providers; and (iii) between a service provider and a group of consumers. Therefore, it appears that the Unified License attempts to contractually restrict jurisdiction to competent Courts in NCT of Delhi for their disputes such as Writ Petitions. The move by the DoT to restrict jurisdiction to courts in NCT of Delhi may be challenged since jurisdiction of courts is to be determined in accordance with the Code of Civil Procedure, 1908.
  • Applicability of other statutes: It has now been clarified that in addition to the Indian Telegraph Act, 1885 or Indian Wireless Telegraphy Act, 1933 the statutory provisions and the rules made under the Information Technology Act, 2000 and / or the Telecom Regulatory Authority of India ("TRAI") Act, 1997 and the rules and regulations thereunder shall govern the provision of service under the Unified License. Further, any order passed under these statutes shall also be binding on the licensees.
  • Electromagnetic Radiation and renewable energy: The DoT has incorporated their notifications on the permissible level of electromagnetic radiation from base stations as part of the Unified License. The Unified License requires the licensee to audit and self-certify that the base stations are confirming to the limits for public exposure. Similarly, the DoT has included its obligation to adopt Renewable Energy Technologies as part of the Unified License.
  • Discontinuation of Service: With respect to discontinuing a service launched by an operator, a new provision has been added by the Unified License under which notice must be given to the DoT as well as the TRAI of at least 60 calendar days in advance with reasons. Additionally a notice must also be given to all the subscribers by sending a 30 calendar days notice to each such subscriber. However, the DoT reserves the right to reject such request. As such it appears that the DoT has reserved with itself the right to review an operator's proposal for discontinuation and even reject such proposal.


  • Other Services Provider ("OSP") Registration: The Unified License does not include services that fall under the category of "Application Services" under the OSP regime (such as call centres). However, the OSP regime is in any case separate from the regular telecom licenses since it is a registration process under the OSP regulations as opposed to a license.
  • Voice Mail/Audiotex/ Unified Messaging Services: Prior to the Unified License, this service was governed under a specific license. This service has not been identified as a separate service category under the Unified License. The decision not to include a separate service category for this service under the Unified License may rise questions on whether this services would continue be governed by the old license agreement or if the intention of DoT is that there would be no license applicable to this service. The Unified License mentions that Access Service providers will be allowed to provide Voice Mail/Audiotex/ Unified Messaging Services by itself; however this was the case under the old regime as well. It is not clear how operators who do not wish to invest in the Access License may provide Voice Mail/Audiotex/ Unified Messaging Services. There have been discussions on creating a separate license category for value added services 6 - it may be that the GoI is contemplating categorising Voice Mail/Audiotex/ Unified Messaging Services as a value added service subject to a separate licensing regime. It is not yet clear what such a licensing regime would entail.
  • Mobile Virtual Network Operator ("MVNO"): MVNO essentially is the provision of telecom services using the bandwidth / spectrum of a licensed service provider under a separate brand name. TRAI had issued its recommendations in 2008 suggesting that the DoT should issue a separate license category for MVNOs 7, however, no notification has been made by the DoT giving effect to these recommendations. MVNO gains even more significance under the Unified License due to the introduction of the concept of Presumptive AGR, whereby a spectrum holder will be required to pay license fees in the form of a percentage of notional revenues or a percentage of the actual revenues, whichever is higher, regardless of the actual revenues earned. Therefore, the introduction of MVNO would help spectrum holders utilize excess spectrum by leasing the same to MVNO operators.


  • Access Services

    1. It has been clarified that the Access Service are the only license category which can interconnect Internet Telephony Network to a normal landline (PSTN) / Cellphone. In the earlier license, while it was clear that Access Service providers could provide internet telephony, it was not expressly stated that Access Service providers could provide interconnection between the data network and the PSTN (that is expressly prohibited for ISPs).
    2. An important change that has been introduced under this license is the recognition of roaming arrangements specifically allowing 3G intra-circle roaming (ICR) pacts. The license now provides that an operator may enter into agreements for roaming facilities (within the same service area or other service areas) with other service providers. It has been clarified, that any such roaming arrangement will not entitle such operator to acquire customer in the spectrum band / technology not held / not deployed or for services / facilities not offered by the operator in its home network. This change in policy has come after various rounds of litigation and disputes regarding 3G Roaming Pacts and is a welcome change in this regard and will incentivize the adoption of the Unified License by existing licensees.
  • Internet Service

    1. The erstwhile ISP license regime provided for two kinds of licenses, i.e. one an authorization to provide services at a national level (Category A) and an authorization to provide services at telecom circle level (Category B). The Unified License has introduced an authorization for an additional service area, i.e. Secondary Switching Areas ("SSAs") (Category C) which is more concentrated than a Telecom Circle and has divided the country into 322 SSAs. This means that ISP service providers can now opt for providing services in smaller service areas. However, in the event that an entity applies for a Category C authorization for more than 4 SSAs such entity must obtain a Category B authorization. This would encourage deeper penetration of data networks in the country.
    2. The position with respect to Internet Telephony remains unchanged, i.e. ISPs are allowed to offer limited Internet Telephony 8 in India and cannot connect an Internet Call to a landline / cellphone in India. The recommendations of TRAI 9 for unrestricted IP telephony have not been accepted in this round of reforms.
    3. The DoT has permitted internet service providers who also have a DTH service license from the Ministry of Information and Broadcasting, to allow customers for downloading internet data through DTH after obtaining necessary permission from the DoT.

Apart from the changes and clarifications that have been discussed above, the Unified License has consolidated within its ambit various other services such as the GMPCS Service, PMRTS Service and Resale of IPLC service. The Unified License has been a long pending demand of the industry and was widely considered as one of the most important reforms required to help revitalize this sector. With the increase in FDI Limits and a new mergers and acquisitions policy on the anvil the telecom sector looks like it may be able to regain some of the sheen that it lost in the last few years.


  2. Centre For Public Interest Litigation & Ors. Vs Union Of India & Ors (2012)1CompLJ497(SC) our analysis of the same is available at
  6. TRAI's Recommendations on Application Services issued on May 14, 2012 wherein the TRAI has inter alia recommended that value added services be subject to a licensing regime.
  7. TRAI's Recommendations on Mobile Virtual Network Operator (MVNO) issued on August 6, 2008.
  8. ISPs were allowed to provide internet telephony connecting the following: (i) PC to PC; within or outside India (ii) PC in India to PSTN/PLMN abroad and (iii) Any device connected to ISP node with static IP address to similar device within or outside India
  9. TRAI's Recommendations on Issues related to Internet Telephony issued on August 18, 2008.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions