Telcos can start spectrum trading as govt issues guidelines

The government today issued spectrum trading guidelines that allow telecom operators to procure radiowaves for mobile services from other companies to meet their requirements and improve service quality.
Earlier, telecom operators had the only option to procure airwaves through an auction conducted by the Department of Telecom as per its own schedule.
"The government has now decided to allow trading of access spectrum as per guidelines," an official paper said.
It is seen as an exit route for loss-making telcos and offers relief to those with a large subscriber base which need more spectrum.
As per the guidelines, a telecom operator can sell the right to use spectrum to another operator either in part or full holding at the level of telecom circle.

"All access spectrum bands earmarked for access services by the licensor (DoT) will be treated as tradable spectrum bands," the guidelines said.

Unlike spectrum sharing, the guidelines have restricted trading to presently allocated frequencies in 800 Mhz (being used for CDMA mobile services), 900 Mhz (2G and 3G), 1800 Mhz (2G and 4G), 2100 Mhz (3G), 2300 Mhz (4G) and 2500 Mhz (4G).
However, only spectrum purchased through auction except 800 Mhz purchase in 2013 auction, or for which market rate has been paid to the government can be used for trading.
The spectrum in 2013 auction was purchased by Sistema Shyam Teleservices and the company will require to pay the difference of air wave price in 2013 and 2015 auctions.

With the transfer of spectrum, liabilities related to spectrum like network rollout and dues will get transferred to the company buying it.
The rules made it clear that a telecom operator will be allowed to trade spectrum only after two years of acquiring it.
Despite the industry opposition, the government has decided to impose transfer fee of one per cent on entire transaction amount on the buyer.
While telecom operators will be free to decide the price at which they want to trade spectrum, the government can levy tax and other charges based on market price -- which should not be less than the latest auction-determined price.

"If auction-determined prices are more than one year old, the prevailing market price shall be applied by indexing the last auction price at the rate of SBI PLR (prime lending rate)," the guidelines clarified.
The norms allow telecom operators to change their frequency spot through mutual agreements and such changes will not be treated as spectrum trading.
The move will allow telecom companies to align their frequency spots and provide high-end service at lesser cost.