DoT likely to impose spectrum charges on operators merging their 2G spectrum in the Chennai and Tamil Nadu circles

The Department of Telecommunications (DoT) is deliberating a market price for 2G spectrum being used by operators who merged their licences for the Chennai and Tamil Nadu circles. The department had approved majority of the licence mergers in 2007. According to the norms prevalent at that time, operators were granted extension on licence validity to an extent allowed on the licence which had a later expiry date.

The matter has come up before DoT after Aircel applied for an extension of the validity of its merged licences from 2014 to 2018. Aircel had approached DoT for the merger of its licences for the two telecom circles in October 2010, five years after the government had issued the merger guidelines in 2005.

Since, as per the new telecom policy, spectrum is delinked from licence and the airwaves are to be acquired at the market determined price, DoT is examining the option of asking Aircel to pay for the spectrum for the extended period (2014 to 2018).

It is further contemplating imposing spectrum fee on all the players who merged their licences in the Chennai and Tamil Nadu circles. The basis of charges to be imposed may be derived from the pro-rating method proposed in the notice inviting applications in respect of circles where partial spectrum has been put to auction.

If applied uniformly on all operators which had merged their licences of the two circles, Bharti Airtel is likely to be the most impacted. The operator had got the term of its licence in the Chennai circle extended from 2014 to 2021.

At the time of the merger of the licences of Bharti Airtel (on January 5, 2007), the spectrum was bundled with the licence and there did not exist the concept of one time spectrum charges and accordingly the licences were merged without any spectrum charge being levied on the operator. The other service providers which merged their licences in the two circles include Tata Teleservices Limited (TTSL) and Reliance Communications (RCOM).  There was no licence extension for TTSL and RCOM as the effective date of their licences for the Chennai circle and Tamil Nadu circle were August 31, 2001 and September 26, 2001, respectively being migrated from a single basic service licence to two unified access services licences and then merged into single unified access service licence for Tamil Nadu.