After a series of claims made recently by the communications and IT minister A Raja that he strictly went by the Telecom Regulatory Authority of India?s (Trai) recommendations while allocating licences bundled with 2G spectrum to new players, the regulator has started to bring out the communication that transpired between it and the department of telecommunications (DoT), highlighting instances where the DoT has in fact deviated from the regulator?s recommendations in framing the guidelines.
Two specific instances have been cited in the correspondences put up on the Trai?s website. One of them relates to merger and acquisition norms while the second one is regarding mobile number portability.
According to the Trai, the regulator had asked the DoT to clarify the mergers and acquisition guidelines since the DoT guidelines don?t bring out clearly the position on the acquisition. The regulator in its recommendations dated August 28, 2007 had said, ?The authority recommends that the acquisition of equity capital up to 10% of the target licensee?s enterprise shall be permitted by an automatic route and anything beyond that and up to 20% of the equity holdings of the target licensee company shall be approved on a case by case basis?. However, the DoT neither mentioned anything on acquisitions nor permitted stake purchase beyond the 10%.
The regulator has further highlighted that while limiting the crossholding in a circle was important to avoid monopolistic practices but an upper limit of 20% was essential for ?ensuring flexibility in the commercial operations?.
The DoT, however chose to remain silent on acquisition, issuing guidelines only on the mergers, something which the regulator has asked it to clarify and has also cited various definitions of ?acquisition? from a legal stand point.
The regulator has also stated that in the case of mobile number portability (MNP), it had recommended that there be a single clearing agency for whole of the country, which would act as the porting agency. However, while framing the final guidelines the DoT preferred to divide the country into two zones, thereby necessitating the need for two such agencies.
In another instance, while Trai had stated while calculating the net worth of the equity holder in the applicant for the MNP mechanism, equity holders who have 10% or more equity in the applicant company shall be counted. Departing from the recommendation the DoT stated that net worth of only those equity holders shall be counted who have 26% or more equity in the applicant company in the proportion of their direct equity.
Earlier, FE had reported, after analysing the Trai recommendations of 2003 and 2007 that while its recommendations had talked about auctioning of licence but not of 2G spectrum, the DoT allocated new licences, without any auction at a price discovered in 2001.
