Overruling suggestions from telecom regulator Trai, the telecom commission has recommended a 15 per cent increase in the reserve price for telecom spectrum in the 1800 Mhz band and 25 per cent hike in the 900 Mhz band for the forthcoming auctions.
The enhanced reserve price, if approved by the empowered group of ministers, will be applicable to metro cities and A-category telecom circles like Delhi, Mumbai, Kolkata, Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. The auction for the 1800 MHz spectrum will be held in January next year.
The 25 per cent increase in reserve price for the 900 MHz band will be applicable to spectrum for Delhi, Mumbai and Kolkata circles.
The telecom commission also overruled the Trai advice to not auction the 800 MHz spectrum “due to lack of interest in the industry“. Instead, it decided to go ahead with the auction and to ask Trai to come up with a base reserve price for the same.
The panel has simultaneously decided to liberalise the merger and acquisition guidelines that are in the works. It has allowed acquisitions in cases where the resultant entity would get a market share of up to 50 per cent.
Earlier, the proposal was to allow M&As only in cases where the new entity would have a market share up to 35 per cent.
The latest norms, when notified, are bound to give a fillip to consolidation in the telecom industry, which now has as many as 12 operators, including some marginal players that entered the sector only to sell telecom licences at a premium. The telecom commission’s decisions would now be vetted and cleared by an empowered group of ministers headed by finance minister Palaniappan Chidambaram.
In September this year, Trai had suggested a 37 per cent cut in prevailing price of spectrum in the 1800 mhz band after two auctions in November 2012 and March 2013 failed. Trai had suggested a reserve price of Rs 1,496 crore for the 1800 mhz band against Rs 2,379 crore earlier. Similarly, it had suggested a 60 per cent cut in the reserve price for the 900 mhz spectrum for Delhi, Mumbai and Kolkata circles to Rs 288 crore, Rs 262 crore and Rs 100 crore, respectively.
But going by the telecom commission’s decision on Wednesday, the new prices would now be Rs 359 crore, Rs 327 crore and Rs 125 crore, respectively.
While the telecom players welcomed the M&A norms, they slammed the decision to hike reserve prices for the 1800 mhz and 900 mhz bands.
The telecom regulator had recommended allowing extended GSM (EGSM) on 800 mhz with the view that it might widen competition for auction of airwaves in this band as and when the auctions are held in future.
CDMA players led by Shyam Systema Telecom (SSTL) welcomed the decision to auction 800 mhz along with other bands.
The telecom department has targeted Rs 11,000 crore revenue from the sale of airwaves in January 2014. Till now, the government has mobilised over Rs 1,00,000 crore by selling airwaves in different bands over the past two years.
On the impact of flexible M&A norms, industry officials felt they would give a fillip to the consolidation process. They said the proposed merger among Tata Teleservices, Russia’s Sistema JSFC and Aircel controlled by Malaysia’s Maxis might get a boost.
The enhanced reserve price, if approved by the empowered group of ministers, will be applicable to metro cities and A-category telecom circles like Delhi, Mumbai, Kolkata, Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu. The auction for the 1800 MHz spectrum will be held in January next year.
The 25 per cent increase in reserve price for the 900 MHz band will be applicable to spectrum for Delhi, Mumbai and Kolkata circles.
The telecom commission also overruled the Trai advice to not auction the 800 MHz spectrum “due to lack of interest in the industry“. Instead, it decided to go ahead with the auction and to ask Trai to come up with a base reserve price for the same.
The panel has simultaneously decided to liberalise the merger and acquisition guidelines that are in the works. It has allowed acquisitions in cases where the resultant entity would get a market share of up to 50 per cent.
Earlier, the proposal was to allow M&As only in cases where the new entity would have a market share up to 35 per cent.
The latest norms, when notified, are bound to give a fillip to consolidation in the telecom industry, which now has as many as 12 operators, including some marginal players that entered the sector only to sell telecom licences at a premium. The telecom commission’s decisions would now be vetted and cleared by an empowered group of ministers headed by finance minister Palaniappan Chidambaram.
In September this year, Trai had suggested a 37 per cent cut in prevailing price of spectrum in the 1800 mhz band after two auctions in November 2012 and March 2013 failed. Trai had suggested a reserve price of Rs 1,496 crore for the 1800 mhz band against Rs 2,379 crore earlier. Similarly, it had suggested a 60 per cent cut in the reserve price for the 900 mhz spectrum for Delhi, Mumbai and Kolkata circles to Rs 288 crore, Rs 262 crore and Rs 100 crore, respectively.
But going by the telecom commission’s decision on Wednesday, the new prices would now be Rs 359 crore, Rs 327 crore and Rs 125 crore, respectively.
While the telecom players welcomed the M&A norms, they slammed the decision to hike reserve prices for the 1800 mhz and 900 mhz bands.
The telecom regulator had recommended allowing extended GSM (EGSM) on 800 mhz with the view that it might widen competition for auction of airwaves in this band as and when the auctions are held in future.
CDMA players led by Shyam Systema Telecom (SSTL) welcomed the decision to auction 800 mhz along with other bands.
The telecom department has targeted Rs 11,000 crore revenue from the sale of airwaves in January 2014. Till now, the government has mobilised over Rs 1,00,000 crore by selling airwaves in different bands over the past two years.
On the impact of flexible M&A norms, industry officials felt they would give a fillip to the consolidation process. They said the proposed merger among Tata Teleservices, Russia’s Sistema JSFC and Aircel controlled by Malaysia’s Maxis might get a boost.
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