The Telecom Regulatory Authority of India (TRAI) has told the Department of Telecommunications (DoT) that it is firm on its recommendations pertaining to mergers and acquisitions (M&A). In 2010, TRAI had said that the combined entity in such a case should pay the government the market value for all airwaves it holds beyond the contracted amount.
TRAI also added that the combined entity, post the merger or acquisition, can hold a maximum of 14.4 MHz. TRAI’s reiteration comes at a time when DoT is working on establishing a new telecom policy that aims to change the norms pertaining to M&As. Prior to this, TRAI had told DoT that contracted airwaves was only 6.2 MHz per region for a GSM operator, thereby strengthening the government’s case to impose a one-time fee on mobile phone companies who hold spectrum beyond this limit.
In its latest recommendations in February 2011, TRAI had suggested that mobile phone companies be charged a one-time pan-India fee of Rs 45.72 billion for every unit of airwaves they hold beyond the contracted limit.
Companies such as Bharti airtel, Vodafone Essar, Idea Cellular and Bharat Sanchar Nigam Limited (BSNL) claim that mobile permits entitle them to 15 units of airwaves in every region and, therefore, cannot be subject to a one-time fee for all spectrums beyond the 6.2 MHz limit as prescribed by the regulator. However, TRAI reiterated that any airwaves beyond the contracted amount of 6.2 MHz, must be classified as excess spectrum.
New operators, including dual technology companies such as Reliance Communications and Tata Teleservices Limited that were given mobile permits in 2008, have been given only 4.4 MHz of startup spectrum. While TRAI, in its February 2011 recommendations, had not recommend pricing for additional airwaves be applied for airwaves beyond the 4.4 MHz mark for these companies, it said that every unit of airwaves between 4.4 MHz and 6.2 MHz could be valued at Rs 17.70 billion (pan-India ).
TRAI also said that airwaves between 4.4 MHz to 6.2 MHz should continue to be allotted to mobile phone companies through the subscriber linked criteria for a further period of six months to enable all companies get the contracted amount of airwaves as specified in their permits. It added that the government had already entered into contracts with operators and therefore legal opinion must be sought DoT were to change the allocation procedure for dishing out airwaves between 4.4 MHz and 6.2 MHz.
Additionally, TRAI has also asked DoT not to charge for excess airwaves beyond 6.2 MHz from the time it was given to mobile phone companies, but go by the regulator’s stance of imposing this fee only from April 1, 2010.
