Govt eases merger norms in telecom sector
New Delhi, February 15
In a major advantage to old GSM operators, the government has said that all service providers would be allowed to hold higher spectrum of up to 10 MHz which would help them offer quality services.
Announcing a part of the new telecom policy at a press conference here, Telecom Minister Kapil Sibal said making mergers and acquisitions (M&As) would now be easier.
“Merger up to 35 per cent market share of the resultant entity will be allowed through a simple, quick procedure,” said Sibal.
TRAI, the telecom sector regulator, has been asked to formulate guidelines, following which the ministry will take a final call on the issue. The market share would be determined based on total subscriber base of the merged entity and the AGR of the licencees.
The minister, however, skirted all pricing issues which would have a major bearing on the sector in the coming months, especially, after the recent Supreme Court order.
Sibal said: "The prescribed limit on spectrum assigned to a service provider will be 2x8 MHz (paired spectrum) for the GSM players for all service areas other than Delhi and Mumbai where it will be 2x10 MHz (paired spectrum)."
The current prescribed limit is 6.2 MHz of GSM spectrum. However, the operators would be free to acquire additional frequency beyond the prescribed limit, in the open market, should there be an auction of spectrum subject to the limits prescribed for merger of licences.
Old GSM operators are supposed to pay one-time charge for extra spectrum beyond 6.2 MHz but it was not clear whether now one-time charge would be beyond the new prescribed limit or not as the government was still to work out the pricing issues.
When asked categorically about the pricing issues, the minister said that the government would get back as when these issues are sorted out.
There will be uniform licence fee across all telcom licenses and service areas which will progressively be made equal to eight per cent of the adjusted gross revenue in two yearly set-ups starting from 2012-13. Licence fee is a levy paid by all operators as the annual fee.
On renewal of licenses, Sibal said the renewal of licence would be done for 10 years. "It will not be an automatic continuance of the existing licence condition, including the quantum and the price of spectrum to be allocated, but the licence will certainly be renewed for a period of 10 years," he said. These two norms were however not in line with the expectations of the telecom sector, specially the private players who expressed their disappointment over the new licence fee and renewal norms.
COAI General Secretary RS Mathews expressed dissatisfaction on the reduction in licence term from 20 years to 10 years. "The telecom industry is an investment heavy sector and we had recommended 20 years as we think 10 years is a short duration," he added.
Country’s largest telecom operator Bharti Airtel said, “We welcome the much-awaited policy guidelines announced by the ministry today. These guidelines will benefit the telecom sector immensely in the long run.”
The new policy
Telecom Minister Kapil Sibal announced new broad guidelines for spectrum management and licensing framework. From now, all future licences will be unified licences and allocation of Spectrum will be delinked from the licences n
In a major advantage to old GSM operators, the government has said that all service providers would be allowed to hold higher spectrum of up to 10 MHz which would help them offer quality services n
Sibal said the renewal of licence would be done for 10 years
n In a major advantage to old GSM operators, the government has said that all service providers would be allowed to hold higher spectrum of up to 10 MHz which would help them offer quality services
n Sibal said the renewal of licence would be done for 10 years