DoT expects to prepare guidelines on spectrum sharing by month-end

Department has set September 30 as deadline for preparing guidelines for spectrum

The department of telecommunications (DoT) expects to prepare the guidelines for sharing of spectrum and active infrastructure by month-end.

According to a recent discussion, after detailed deliberations, DoT has felt the guidelines on sharing of spectrum and active infrastructure need to be viewed holistically from a ‘policy angle’, and has set September 30 as the last date for preparing those.

The guidelines for much-awaited mergers and acquisitions (M&A) of telecom companies would also be finalised in this month, according to a recent internal discussion of DoT.

Earlier this month, the Telecom regulatory Authority of India (Trai), in its recommendations on spectrum valuation and pricing, suggested companies be allowed to share and trade excess spectrum with the ones facing a spectrum crunch. The move, if accepted by the government, is also expected to boost mergers and acquisitions in the sector.

Trai has proposed that spectrum in all bands and technologies such as 2G, 3G and Broadband Wireless Access should be allowed to be traded. However, only an outright transfer of spectrum should be allowed without any leasing, initially. DoT had earlier noted in the draft M&A guidelines that telecom operators would have to surrender airwaves beyond the government prescribed limit if the merged or resultant entity’s spectrum holding goes beyond the limit.

Companies would get one year’s time for this, and the merger of licences would be restricted to the same service area. Also, the merged entity would have to migrate to the new Unified Licensing regime.

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

It also noted that if the market share of the merged entity crosses 60 per cent, mergers would not be allowed. The cap for spectrum holding for the merged entity would be 25 per cent of the total spectrum assigned and 50 per cent of the airwaves assigned in a given band. It can be by way of auction in the concerned service area in case of 900MHz and 1,800MHz bands. The ceiling for the 800MHz band would be 10MHz.

This would impose severe restrictions for the GSM operators for possible mergers. The top three GSM operators – Bharti Airtel, Vodafone India and Idea Cellular - together hold about 54 per cent market share, according to TRAI data.

In April this year, deputy chairman of the Planning Commission Montek Singh Ahluwalia had written to the communications and IT minister Kapil Sibal, making a strong pitch to allow trading of spectrum. Ahluwalia, in his note, had stated that the tradability of spectrum could not be allowed earlier as spectrum was being auctioned on the basis of an administered price. But, if it is auctioned on the clearly-stated basis that it is tradable, then any potential for gain through subsequent trading would be reflected in the auction price. He had also noted that tradability would ensure greater economic efficiency, resulting in higher revenues to the government on account of higher spectrum usage charges.

TRAI has backed the idea of spectrum trading for many years. The National Telecom Policy of 2012 also favoured trading of airwaves. In its recommendation in April 2012, TRAI had noted: “the authority is of the opinion that it is still pre-mature to allow spectrum trading and this issue might be taken up at a later date,” as spectrum was being auctioned at an administrative price at that time.