GSM players get spectrum relief

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EGoM Allows Telcos To Retain Up To 2.5 MHz In Most-Preferred Band
TIMES NEWS NETWORK

New Delhi: A ministerial panel on Thursday offered some respite to telecom companies using GSM technology, which can now hope to retain a part of the spectrum in the 900 mega Hertz frequency band instead of the telecom regulator’s suggestion to switch to the 1,800 MHz band that is seen to be less efficient. The flip side is that the reserve price will be higher.
The empowered group of ministers (EGoM), headed by finance minister P Chidambaram, has recommended that telecom companies such as Bharti Airtel and Vodafone can retain up to 2.5 MHz spectrum in the most-preferred band, provided they pay a price which will be determined later through auction.
The regulator had pegged the reserve price at over Rs 36,000 crore for spectrum in the 900 MHz band, which was twice the level proposed for 1800 MHz.
The government, however, settled for a reserve price of Rs 14,000 crore for the 1,800 MHz band after telecom companies launched a highpitched protest and invoked consumer interest to argue for a lower base price for bidding.
While auction for 1,800 MHz spectrum is due to start later this month, sources said airwaves in the 900 MHz frequency would be bid out 18 months ahead of licence renewal. So, the auctions are expected sometime next year and could help the government mop up around Rs 1 lakh crore and ease the fiscal pressure. Despite the easier rules, industry lobby group COAI was still complaining. Consulting firms such as PricewaterhouseCoopers,
which have advised some of the GSM players, too spoke in the same tone. “The partial spectrum refarming as approved by the EGoM on Thursday could result in a detrimental impact on consumers through higher prices as well as poorer quality of service,” Mohammad Chowdhury, leader of the telecom practice, said in a statement.
“The EGoM has decided on what needs to be done for all those who have 5 MHz spectrum,” telecom minister Kapil Sibal said after the meeting. He, however, did not comment on what prompted the change in stance especially after the Telecom Commission, an inter-ministerial panel, had agreed with Trai’s proposal to get telecom operators to give up all airwaves in the 900 MHz band.
The EGoM also decided that companies will have to pay market price if they merge or acquire another company which was allocated spectrum at the old price of Rs 1,658 crore. “... in the context of mergers and acquisitions, what is the price that would have to be paid if the acquiring company has to acquire spectrum given to a company at an administered price, which is Rs 1,658 crore, that’s one decision that has been taken,” Sibal said.
Sources said the decision was taken to create a level playing field for companies that are participating in the auction to buy pan-India spectrum at minimum price of Rs 14,000 crore and those who wanted to take acquisition route to acquire spectrum. Without disclosing details, Sibal said the decision taken by the EGoM on mergers and acquisitions will be placed before the Cabinet for approval. “Hopefully, the Cabinet will meet on November 8. The decision taken today, except on refarming, and those that were decided by the EGoM will be placed before the Cabinet,” Sibal said.
RINGING IN A NEW REGIME

• Telcos won’t need to shift to 1,800 MHz as they can retain spectrum in 900 MHz band

• 1,800 MHz reserve price set at Rs 14,000cr instead of Rs 36,000cr after telcos cried foul

• Auction for 1,800 MHz to start this month; 900 MHz to be bid 18 months before expiry

• Govt expected to net Rs 1L cr, even as industry and experts warn of higher tariffs, poor service for customers