No govt permission needed for spectrum trading

Tags: News
Telecom firms will not require government permission for trading in spectrum, although they will have to inform the authorities of such deals 6 weeks in advance, sources said.

The companies will also be required to pay the government a transfer fee based on sale value or market price.

They said that according to proposals on the issue by telecom regulator Trai, "the seller and the buyer shall be required to inform the lincesor regarding the spectrum trade 6 weeks prior to the effective date of trade. However, no permission will be required from the licensor/government for spectrum trading".

Telecom operators met Trai Chairman Rahul Khullar yesterday to discuss the guidelines for the implementation of spectrum trading, which are expected to be released within a few days.

The Telecom Regulatory Authority of India is of the view that radiowaves assigned through an auction on or after 2010, will allowed to be traded, sources said, adding that it will also be applicable in cases where telecom operators have paid the market price of the spectrum to the government.

Trai is also believed to have recommended that spectrum, which is assigned administratively, can be traded on payment of the prescribed market value to the government for the remaining validity of the radiowaves.

Sources said the buyer has to comply with cap of 25 per cent of its total spectrum holding and 50 per cent cap within a given band in each service area.

"Only CMTS/UASL/UL(AS)/UL licensees shall be eligible to participate in spectrum trading and requirement for net-worth and paid-up equity capital of the buyer shall be same that prescribed for participating in the auction for that spectrum band," the source said.

The companies will not be permitted to sell the spectrum acquired through trading for a period of two years.

"A transfer fee of 1 per cent of the transactional amount or 1 per cent of the prescribed market price, whichever is higher, shall be imposed on all transactions," the source added.

Trai has proposed that banks or financial institutions, which have entered into a tripartite pact with the licensor and licensee, should not be allowed to trade spectrum.

However, the lender would have the rights to recover the dues by nominating a buyer to whom the usage right of the spectrum would be transferred.

Inter-ministerial panel Telecom Commission in its meeting in October had given the in-principle approval to spectrum trading and the same was approved by EGoM. Trai was then asked to provide detailed guidelines that should be followed for trading.

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