COAI asks DoT to allow spectrum trading

Also says trading transaction should be subject to spectrum cap of 25% of total commercial spectrum assigned

GSM telecom lobby Cellular Operators Association of India has requested the Department of Telecommunications (DoT) to allow spectrum trading as part of the upcoming merger and acquisition (M&A) policy for the telecom industry.

 

In a recent communication, it has also stated that trading transaction should be subject to spectrum cap of 25% of total commercial spectrum assigned.

 

Besides, the association has said that spectrum sharing should also be allowed as spectrum is technology neutral.

 

In its submission, the association has also stated that the Government may consider if merger approval can be do away with. Only prior intimation should be required where the merger is taking place between holding and subsidiary companies or with group companies and where the transferor company has acquired the auctioned spectrum or paid the market price of the spectrum, it added.

 

Any attempt to impose significant additional cost of M&A transaction would discourage M&A and consolidation, and administratively acknowledged spectrum is a part of M&A transaction, to that extent a tax of about 20% may be imposed, COAI has proposed.

 

The association also suggested that spectrum cap should be irrespective of technologies or bands used by any service provider. 

 

Meanwhile, DoT is likely to finalise the M&A policy for the telecom companies by August 31. DoT has noted in the draft M&A guidelines that telecom operators will have to surrender airwaves beyond the government prescribed limit if the merged or resultant entity’s spectrum holding goes beyond the limit.

 

According to the draft policy, companies will get one year time for this, and the merger of licences will be restricted to the same service area. Also, the merged entity will have to migrate to the new Unified Licensing regime.

 

It also noted that the government will allow merger of up to 35% market share of the resultant entity through a simple, quick procedure. Beyond this, M&A proposals will be considered case-to-case basis. However, the companies should not breach the 25% cap on GSM spectrum or 10MHz for CDMA spectrum holding in any service area.