Thursday, 23 January 2014

Telecom companies won’t need prior approval for trading radio spectrum: TRAI

Telecom companies seeking to trade radio spectrum will not need prior approval to do so, but need to inform the government at least six weeks in advance, according to draft guidelines for spectrum trading prepared by the Telecom Regulatory Authority of India.
Spectrum trading refers to the outright transfer of air waves to another operator by the owner of the radio waves for a telecom operating area for a fee. The draft guidelines, which were reviewed by Mint, are expected to be finalized and approved by the end of the week before the next auction of spectrum gets underway on 3 February.

Bharti Airtel Ltd, India’s largest communications service provider, Vodafone India Ltd, Mukesh Ambani-controlled Reliance Jio Infocomm Ltd, Idea Cellular Ltd, Tata Teleservices Ltd, Reliance Communications Ltd, Aircel Ltd and Telewings Communications Services Pvt. Ltd that runs the Uninor brand are participating in the auction. Trai has suggested that only those companies which participate in the auction should be allowed to trade spectrum.
The government has kept the spectrum-trading rules in line with other prevailing telecom policies, including rules governing their auctioning and the new merger and acquisition policy. It means that the acquiring telecom company cannot hold more than 50% of the spectrum on a certain band and must have a wireless operating permit at the time of buying the spectrum.
The government is likely to permit trading of spectrum in all the bands currently used by communications service providers. The rules are likely to also include 700 megahertz (MHz) and 1900MHz once they become part of the spectrum used by telcos.
As expected, these firms can only sell spectrum acquired after 2010 through an auction or that for which the prevailing market price has been paid to the government. The sale of the spectrum will not alter the validity period of the spectrum when it was bought from the government.
Telcos cannot trade spectrum on a band where they have acquired air waves for a minimum of two years, after acquiring the spectrum. The buyer would have to pay 1% of the transaction amount, or prevailing market price of the spectrum, whichever is higher, as a transfer fee. The guidelines on trading have been long awaited and most operators have been asking for clarity on the issue before the spectrum auction begins.
“Clarity on other policy matters like spectrum trading, one time spectrum charge, license renewals, etc., before auction would be helpful in making auction successful as operators would be bidding keeping in mind other policies of the government,” said Hemant Joshi, a partner at consulting firm Deloitte Haskins and Sells.
Rahul Khullar, chairman of Trai, held a meeting on Tuesday with heads of the telecom companies on the issue. The regulator is likely to publish detailed recommendations before the Telecom Commission meets on 25 January. The Commission is expected to finalize the new uniform spectrum usage charges in that meeting as well.
Trai, in its September recommendations, had said private telcos should be allowed to sell spectrum, to which the Commission gave its in-principle approval in October.
The Commission’s decisions will be reviewed by an empowered group of ministers on spectrum headed by finance minister P. Chidambaram in its meeting on 27 January, which is also the last date for bidders to withdraw their applications to participate in the auction.

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