NLD License in India

What is NLD License and what is NLD in telecom?

NLD License is the DOT-issued authorization that gives the Licensee the power to provide National Long-Distance Service. It means that the company can provide telecommunication services over a long-distance network. That long-distance network is one that connects many Short Distance Charging Areas (SDCAs).

A National Long Distance Provider, also known as NLDO, is a telecom operator that provides NLD Service by providing the digital resources required to carry long-distance telecom services on a national scale. The telecom services discussed here can be:

1. Voice
2. Data
3. Fax
4. Text
5. Video multimedia

Important facts about the NLD License that one needs to know

Before you apply for National Long Distance License, you should make yourself acquainted with the facts mentioned below:

• You must register your NLD in telecom business as a company to gain eligibility to apply for the NLD License.
• You can only obtain the license if you use the prescribed format application.
• There are no multiple NLD licenses. Thus, as a lone applicant, you can only apply for one National Long Distance Service license.
• Once the NLD License is issued to you, it will have a validity of 20 years. Afterwards, you can renew it for 10 years.
• The entry fee for a license for National Long Distance is INR 2.5 Crore. It’s non-refundable.
• In addition to the entry fee, which has to be paid only once, you’re also required to pay the annual license fee, which is 15 percent of your Adjusted Gross revenue

 

Eligibility Criteria for NLD License in India

• You must register your NLD in telecom business as a company to gain eligibility to apply for the NLD License.
• You can only obtain the license if you use the prescribed format application.
• There are no multiple NLD licenses. Thus, as a lone applicant, you can only apply for one National Long Distance Service license.
• Once the NLD License is issued to you, it will have a validity of 20 years. Afterwards, you can renew it for 10 years.
• The entry fee for a National Long Distance license is INR 2.5 Crore. It’s non-refundable.
• In addition to the entry fee, which has to be paid only once, you’re also required to pay the annual license fee, which is 15 percent of your Adjusted Gross revenue. 

Regulations for Investment in an NLD:

Total Foreign Holdings

1. The total composite foreign holding for investments in an NLD in networking company must not exceed 74%. The investments can come from the following:
2. Foreign Institutional Investors (FIIs)
3. Non-resident Indians (NRIs)
4. Foreign Currency Convertible Bonds (FCCBs)
5. American Depository Receipts (ADRs)
6. Global Depository Receipts (GDRs)
7. Convertible preference shares
8. Proportionate foreign investment in Indian promoters or investment companies, holding companies, etc.

• • The 74 percent foreign investment can be made directly or indirectly in the operating company. But the remaining 26 percent will be owned by resident Indian citizens or an Indian Company.
  • The foreign direct investment must not exceed 49 percent, and the management must remain with the Indian owners.
  • The foreign component of such an Indian Company will be counted in 74% of investments.
  • However, the foreign component in the total holding of Indian public sector banks and Indian public sector financial institutions will be treated as an ‘Indian’ holding.
  • The Licensee must disclose the status of the foreign holding. He must also certify that the foreign investment is within the ceiling of 74% on a half-yearly basis. 

FDIs

1. The Foreign Direct Investment of upto 49 percent will be allowed in an NLD in networking company.
2. Foreign Investment Promotion Board (FIPB)’s approval is required for FDI in the licensee company, including their holding companies, which bears an overall ceiling of 74 percent. The FIPB will ensure that the investment is not coming from unfriendly countries.
3. The investment approval by FIPB must envisage the conditionality that the company would
4. adhere to the license Agreement.
5. The incoming FDI will be subject to the laws of India and not the laws of the foreign land(s). 

Board of Directors

• The Directors on the Board, including Chairman, Managing Director, and Chief Executive Officer (CEO), must all be resident Indian citizens.
• The appointment to these positions from among resident Indian citizens must be made in consultation with serious Indian investors.
• The Share Holder Agreements (SHA) must incorporate the condition that the majority of directors on the Board must be resident Indian citizens. Also, they must envisage the conditions of adherence to the Licence Agreement. 

Restrictions on Information Sharing

The company must not transfer the following details to any person or a place outside India:

• Any accounting information relating to the subscribers except for roaming and billing. Also,  the licensee can share the required statutory disclosure of financial nature.
• User information, except for the foreign subscribers using an Indian Operator’s network while roaming.
• Infrastructural details or NLD network diagram except to telecom equipment suppliers and manufacturers who undertake the installation, commissioning, etc. of the infrastructure of the licensee Company by signing a non-disclosure agreement.

 Dealing with foreign Telcomes

• When entering into roaming agreements with service providers outside India, the NLD in telecom company must provide the list of users and their details on demand.
• The company must provide a traceable identity of its subscribers.
• No traffic from subscribers within India must be hauled to any place outside India.For this purpose, the location of satellites serving domestic traffic must not be treated as outside India

 

Documents Required for NLD License in India  

Following is the list of documents that you need to acquire the NLD License to become a National Long Distance Service Provider:

• Certificate of Incorporation
• Memorandum of Association
• Articles of Association
• Complete Business Plan
• Funding arrangement for financing the project
• Pay order or Demand draft of the processing fee
• List of directors/promoters/partners/shareholders of the company
• Equity Details with Certificate of Company Secretary of the company’s statutory auditor
• Certified copy of the agreement between the Indian Company and the foreign partner
• Board resolution that authorizes the authorized signatory

 

Process for NLD License in India

To obtain the license to become a National Long Distance Service Provider, you need to take the following steps:

• Furnish the required documents for NLD License.
• File the online application for a License for National Long Distance Service.
• Fulfill the financial and performance bank guarantee requirements.
• Obtain the NLD License.

 

How to become an NLD service provider in India?

Application Submission

• The application will be decided within 15 days of the application submission, and the applicant company will be informed accordingly. 
• Suppose the applicant is eligible for a grant of license for NLD Service. In that case, the applicant will have to deposit a non-refundable Entry Fee and submit Bank Guarantees and other documents.
• The applicant will then have to sign the license agreement immediately within three months from the date of issue of the letter.
• In case of failing to do so, it will be presumed that the applicant is no longer interested, and the application will be rejected. 

Application Rejection

Suppose the applicant is found to be not eligible for the grant of license for NLD Service. In that case, the applicant will then be informed accordingly so that he can file a fresh application by removing the deficiencies.  

NLD Licensing Fee structure:

Adjusted Gross Revenue

• In addition to the entry fee and net worth, the annual license fee also includes USO contribution,   @ 15% of the Adjusted Gross Revenue (AGR).
• The annual license fee, including USO contribution, must be 6% of the Adjusted Gross Revenue. 
• The Licence fee must be paid in four quarterly installments during each financial year. 
• The quarterly installments of the license fee for the first three quarters of a financial year must be paid by the Licensee within 15 days of the completion of the relevant quarter of the year. 
• The Licensee must pay this fee based on the actual revenues for the quarter.
• It must be duly certified with an affidavit by a representative of the Licensee, authorized by a Board resolution coupled with General Power of Attorney. 
• For the last quarter of the financial year, the Licensee must pay the license fee by 25th March based on expected revenues for the quarter.
• For delayed payment beyond the said due dates, a penalty as stipulated in the license for delayed payments will apply. 
• The Licensee must adjust and pay the difference between the payment made and the actual amount duly payable for the last quarter of the financial year within 15 days of the end of the said quarter. 
• The Licensor has the right to inspect books of accounts of the Licensee, or it can have an independent audit conducted to ascertain the correctness of the license fee paid. 

Spectrum and Equipment

The fee or royalty for the use of spectrum and possession of wireless telegraphy equipment must be paid as per the prescription of the Wireless Planning & Coordination Wing. 

The fee/royalty for the user spectrum /possession of wireless telegraphy equipment depends upon various factors such as frequency, hop and link length, area of operation, etc.

Financial Bank Guarantee

The applicant company shall submit a Financial Bank Guarantee (FBG) of Twenty crore rupees one year after signing the license agreement or before the commencement of service.  An FBG is valid for a period of one year and can be renewed from time to time as directed by the Central Government.

License Validity

The license for NLDO is issued on a non-exclusive basis. Therefore, the period of license validity is 20 years. Also, the validity is extendable by 10 years at one time for inter-circle Long Distance operations within the territories of India. 

Regulations by the Authority

• The Department of Telecommunications can restrict the Licensee Company from operating in any sensitive area from the National Security angle.
• To maintain the privacy of voice and data, monitoring must only be conducted after gaining authorization from the Union Home Secretary or Home Secretaries of the States/Union Territories.
• For monitoring traffic, the licensee company must provide access to their network and other facilities and books of accounts to the security agencies.
• In case of not adhering to Licence conditions, the license (s) granted to the company will be canceled, and the Licensor will encash the performance/financial bank guarantee(s). In addition, the Licensor will not be liable for loss of any kind. 

 

Our Assistance in filing the NLD License in India

Our NLD and ILD License consultants possess in-depth knowledge about the policies and the requirements for NLD in networking licenses. So, they pool their expertise to provide you with end to NLD License solutions. Our services consist of:

1. Complete application filing.
2. Document preparation assistance.
3. Auditing Assistance.
4. Department follow up
5. NLD License delivery within an optimal timeline.

National Long Distance Service Provider is a business endeavour possessed by just a few, but those few are worthy of our Assistance. So contact us today, and we will initiate the NLD License process right away.

 

Frequently Asked Questions - FAQs About NLD License

Q.1) What is NLD full form in networking?

A. NLD in telecom stands for National Long Distance. It is a type of Telecom license issued by the Department of Telecommunications, Ministry of Telecommunicationations, Government of India.

Q.2) What is NLD meaning in telecom, or What is NDL in Networking?

A. NLD License is the DOT-issued authorization that gives the Licensee the power to provide National Long-Distance Service. It means that the company can provide telecommunication services over a long-distance network. That long-distance network is one that connects many Short Distance Charging Areas (SDCAs).

Q.3) Who is a National Long Distance Provider?

A. A National Long Distance Provider, also known as NLDO, is a telecom operator that provides NLD Service by providing the digital resources required to carry long-distance telecom services on a national scale. The telecom services discussed here can be:

• Voice
• Data
• Fax
• Text
• Video multimedia

Q.4) Can a company possess multiple NLD licenses?

A. There are no multiple NLD licenses. Thus, as a lone applicant, you can only apply for one National Long Distance Service license.

Q.5) What is the validity of an NLD license?

A. Once the NLD License is issued to you, it will have a validity of 20 years. Afterwards, you can renew it for 10 years.

Q.6) What is the entry fee for the NLD license?

A. The entry fee for a license for National Long Distance is INR 2.5 Crore. It’s non-refundable.

Q.7) What documents must be submitted along with the registration application for an NLD license?

A. Following is the list of documents that you need to acquire the NLD License to become a National Long Distance Service Provider:

• Certificate of Incorporation
• Memorandum of Association
• Articles of Association
• Complete Business Plan
• Funding arrangement for financing the project
• Pay order or Demand draft of the processing fee
• List of directors/promoters/partners/shareholders of the company
• Equity Details with Certificate of Company Secretary of the company’s statutory auditor
• Certified copy of the agreement between the Indian Company and the foreign partner
• Board resolution that authorizes the authorized signatory
• Declaration that every detail entered in the application is correct

Q.8) What is the cost of National Long Distance registration?

A. The applicant company shall pay a one-time non-refundable Entry Fee of Rs 2.5 crores.

Q.9) What is the process of National Long Distance registration?

A. To obtain the license to become a National Long Distance Service Provider, you need to take the following steps:

• Furnish the required documents for NLD License.
• File the online application for a License for National Long Distance Service.
• Fulfill the financial and performance bank guarantee requirements.
• Obtain the NLD License.

Q.10) What if my License application gets rejected?

A. Suppose the applicant is found to be not eligible for the grant of license for NLD Service. In that case, the applicant will then be informed accordingly so that he can file a fresh application by removing the deficiencies.