In a significant development, the government on Friday decided to unify the basic and cellular telecom licences in a bid to end the bitter confrontation between the two sides over WLL mobile services.

The decision would pave the way for conversion of WLL services into fully mobile telecom services and would prove to be a major booster for Reliance that has over 50 lakh (5 million) WLL subscribers.

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However, the cellular operators led by Bharti and Hutchison, who were strongly opposing WLL services by basic operators and had taken the legal recourse, were disappointed by the government decision, saying it would tantamount to legalising the services by one of the WLL operators.

Announcing the decision taken by the Cabinet on the recommendations of the Group of Ministers on telecom,

Communication Minister Arun Shourie said, "This would spur growth in the telecom sector."

Reliance had not been adhering to the licence conditions in its WLL services, Shourie said, adding that the government would issue a notice to Reliance Infocomm.

"The draft of the notice has been approved by the Cabinet," he said but did not give details.

As part of the unification regime, Reliance would have the option of converting its WLL services into full mobile service for consideration of an additional licence fee of Rs 1096 crore (Rs 10.96 billion) in addition to a penalty of Rs 485 crore (Rs 4.85 billion).

After unification, requirement of additional spectrum for new services would be done on payment as per the guidelines from Trai, Shourie said.

Cellular operators have already moved the Supreme Court, challenging TDSAT's order, which had permitted WLL service to basic operators.

Asked whether the unification of licences would end the litigations in the telecom sector, Shourie said, "India is a free country and everybody is free to obstruct anything."

"There may be litigations today... But 3 or 5 years from now there will be no ground for any litigation."

The government, however, deferred a decision to hike foreign investment limit in telecom sector to 74 per cent from the existing 49 per cent, presumably on account of objections raised by one intelligence agency.

Following the objections, the empowered Group of Ministers on telecom headed by Finance Minister Jaswant Singh had left the decision on hiking the investment limit to the Cabinet.

The issue of foreign investment, decision on which is eagerly awaited by cellular firms like Sunil Mittal-promoted Bharti and Hutchison-Essar, would not be looked into by Singh, Communications Minister Arun Shourie told reporters after the Cabinet meeting.