Koshika Telecom Limited

Cancelled

Koshika Telecom Limited was awarded a 10 year cellular service license in 1996 for each of the following telecom circles: Uttar Pradesh East, Uttar Pradesh West, Bihar, and Orissa. By 1999, Koshika Telecom Limited was owned by Usha Group (82%), Filipino cellular provider Piltel (10%), Alcatel (3%). The remaining 5% was owned by non-resident Indians. In July 2001, the Usha Group sold 49% of its ownership in the company to US-based NRI Chiranjiv Kathuria and associates for US$120 million. The company launched its services in Uttar Pradesh East in 1997 and provided services under the name Ushaphone. In 1996, Alcatel signed a 10 year $100 million contract with Koshika Telecom to supply and install GSM networks in the regions of east and west Uttar Pradesh, Bihar and Orissa. The company had invested US$125 million in installing equipment and network by end of 1998. Due to Koshika's rural marketing strategy more than 350 villages were connected via the Ushafone network by 1998. The company committed to pay US$213.1 million in license fees for the four circles over a period of 10 years. However, like many other companies, Koshika faced difficulties in paying its license fees. To reduce the financial burden placed on the telecom operators, a new revenue sharing license fee structure was introduced with the New Telecom Policy in July 1999. This payment structure enabled all telecom license operators in 1999 to switch to a new 15% revenue sharing policy, provided they complete their payment on accumulated dues by January 31, 2000 and that both operators in the circle agree to switch over to the new system. In September 1999, the Department of Telecommunications (DoT) terminated Koshika's cellular service licenses in Uttar Pradesh West, Bihar, and Orissa due to the company's inability to pay the license fees. The DoT refused to allow the company to migrate to the new revenue sharing mechanism since the company failed to pay 20% of its outstanding dues by February 1999. In 2000, the government cancelled its three licenses of UP West, Orissa and Bihar due to unpaid license fees worth almost US$100 million. The company had only paid about US$21.5 million towards its license fee obligation. In 2001, the company continued to owe license fees to the DoT. In October 2002, the government cancelled the remaining license for UP East. "Koshika Line Goes Dead," October 14, 2002, Business World. email sent to USHAcorp@del2.vsnl.net.in 8/12/03

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