Operators to pay more for 2G

New Trai formula plans to replace subscriber-based allocation for spectrum.

Operators with more than 6.2 MHz of spectrum in GSM will have to cough up more if the Telecom Regulatory Authority of India (Trai) has its way. Trai is recommending sweeping changes in the country’s telecom landscape by replacing the current subscriber-based allocation of 2G spectrum with a formula under which GSM operators will have to pay the price discovered in the 3G auction for spectrum beyond 6.2 MHz. CDMA operators will have to pay the same beyond 5 MHz.

However, the operators will have to pay the additional amount on a pro rata basis for the remaining licence period (20 years). Many leading Indian operators like Bharti and Vodafone Essar have spectrum beyond 6.2 MHz. These are some key recommendations expected to be announced by Trai at a press conference here tomorrow.

SPECTRUM SPECS

> Subscriber-linked criteria for allocation of additional spectrum to be replaced

> Operators to pay market-discovered 3G price for spectrum beyond 6.2MHz

> Spectrum sharing to be allowed, but with riders

> Licence to be delinked from spectrum

> Operators with start-up spectrum of 4.4Mhz to be given priority in allocation of additional spectrum as against those with no spectrum

> No new applications for mobile licences to be accepted

> Lock-in period of 3 yrs for selling equity stake removed

> Re-farming of 900MHz band, currently being used by GSM players, to be considered

Last year, the Department of Telecommunications had mandated Trai to come out with recommendations on overall 2G spectrum management, review of the licence terms and conditions, and merger and acquisition rules, among others. Trai had come out with a consultation paper last October for discussion with stakeholders.

While the 3G spectrum auction is expected to end in a few days, a pan-India licence is already valued beyond Rs 13,000 crore for 5 MHz across the country. In a striking contrast, operators have paid Rs 1,650 crore for a pan-India 2G licence that comes with 6.2 MHz spectrum.

Also, new operators with start-up spectrum of 4.4 MHz will be given priority in allocation of additional spectrum of up to 6.2 MHz, as against operators who have not received any spectrum at all. The allocation of the additional spectrum will not be based on subscriber criteria but on stiff new rural rollout obligations.

Trai might also cap the amount of spectrum which can be given to operators in each circle to 8 MHz, except for Delhi and Mumbai, where it could be around 10 MHz.

Trai is also expected to announce the delinking of spectrum from grant of licence for all new licensees who might be issued. It will also make it clear that no more applications beyond what is pending with the government (343 applications) would be accepted.

Also, in a major liberalisation of the merger and acquisition rules in the telecom sector, the mandatory three-year lock-in period during which the licensee cannot sell its company is expected to be removed. It could be replaced by a new rule under which the promoter whose net worth has been taken into consideration for grant of licence will have to keep a minimum 51 per cent stake in the company for five years.

The regulator is also expected to recommend re-farming of spectrum, including 900 MHz currently being used by GSM players, but is suited for 3G and 4G operations for which a consultation process would be taken up soon. The re-farming exercise would also include spectrum available with the defence services, space and broadcasting sectors. It could be used for telecom for which a re-farming fund could be created from the proceeds of 3G auctions.