The department of telecommunications (DoT) is expected to come up with final guidelines on trading, sharing, merger and acquisition of spectrum only next year once the proposed auction in February has taken place. This is in stark contrast to telecom minister Ravi Shankar Prasad’s recent assertion that the norms would be finalised by the year end.
DoT officials feel that if guidelines are notified before the auctions, operators may not bid aggressively, thus impacting government revenues. In fact, similar apprehensions had led DoT to delay notification of trading guidelines in January this year as auctions were supposed to take place in February.
The government expects to garner at least Rs 9,355 crore from sale of radiowaves at the upcoming auction. At least 184 MHz of spectrum in the 900-MHz band and 104 MHz in the 1,800-MHz would be auctioned. However, revenues from 3G airwaves, which are also likely to be put up for auction, have not been estimated.
Telcos say spectrum trading, sharing, merger and acquisition norms would provide much-needed options for exit to some debt-ridden operators in a sector hurt by intense competition and high prices of 3G and 4G airwaves that they bought in 2010.
Meanwhile, DoT is also looking at amendment to a contentious clause in the new M&A rules, which requires a buyer to pay market-linked price for spectrum that comes with any acquisition, minus the entry fee already paid by the seller.
The Telecom Regulatory Authority of India (Trai) had, in July this year, released guidelines on sharing of radio frequencies in all bands among telecom companies to optimally use limited airwaves. Currently, telcos are allowed to share network infrastructure like mobile towers, which has helped them reduce costs, but not airwaves.
Trai has said that spectrum in different bands would be sharable, provided both licensees have spectrum in the same band.
According to a draft of the sharing rules being drawn up by DoT, the government was considering allowing telecom companies to share 2G spectrum with each other as long as their combined holding is not more than 50% of the total airwaves allotted in that region.
Spectrum sharing would also be allowed only between two telcos holding 2G spectrum in the same service area, but not between operators holding airwaves in two separate circles. Bandwidth sharing is also not allowed between operators holding 3G airwaves and operators won’t be allowed to lease their spectrum only share it.