Trai seeks to lock-in traded spectrum

The Telecom Regulatory Authority of India (Trai) wants a two-year lock- in for spectrum a service provider acquires through trading.

Trai has also recommended a ban on leasing of spectrum but has allowed trading in all bands of airwaves acquired through market mechanism and not allotted at administered prices.

It has proposed a 1 per cent transaction fee on trading of spectrum within its guidelines. This impost will be computed on the basis of the higher of the actual price paid by an acquirer of spectrum or its market rate. The maximum quantum of spectrum that can be traded in any licence service area has been set at 50 per cent. Moreover, no single operator can put on the trading block more than 25 per cent spectrum it holds at any given point of time.

Telecom companies need not seek prior approval for buying or selling spectrum. But they will have to inform the telecom department six weeks in advance of the impending trade.

The Telecom Commission will consider these recommendations within a week before the department notifies the guidelines.

Trai has also said a telecom operator cannot trade in spectrum in bits and parts across a licence area. But after meeting all the rollout obligations, a company can sell any excess spectrum in a service area.

Trai has made these recommendations based on consultations with a steering committee of telecom operators across technologies and spectrum in different bands they hold.

The steering committee had representatives of Aircel, Bharti Airtel, BSNL, Idea, Loop, MTNL, Reliance Communications, Reliance Jio Infocomm, Shyam Systema, Tata Teleservices, Videocon Telecom and Vodafone.

In allowing spectrum trading Trai has referred to practices across the world. Secondary market spectrum trading is allowed in the US, Australia, Canada, New Zealand and Guatemala. Within the European Union the countries that allow spectrum trading are Austria, the Czech Republic, Denmark, Finland, France, Lithuania, Norway, the Slovak Republic, Spain, Switzerland, Turkey and UK. In these countries the usage rights of spectrum are traded partially across frequencies.

Trai chief Rahul Khullar had met Bharti Airtel’s joint MD Gopal Vittal, Reliance Jio Infocomm’s MD Sandip Das, MTS India’s chief executive Dmitry Shukov, Uninor’s chief Morten Karlsen Sorby and Videocon Telecom’s chief Arvind Bali for consultations. Vodafone’s Marten Pieters, Idea’s Himanshu Kapania and Tata Teleservices’ Srinath Narasimhan were not part of the consultations.

PwC India’s Mohammad Chowdhury had told Financial Chronicle last week that rules being framed should be equitable and non-discriminatory for all players in spectrum, “given the fact that some have been allotted spectrum at administered prices while others have acquired it at market rates.”

This concern has been taken care as the Trai recommendations ban trading in spectrum allotted at administered rates.

Credi Suisse in a note for investors in the telecom industry cautioned that some uncertainty would always remain, though Indian regulators were attempting to introduce greater clarity on trading in spectrum, refarming, mergers and acquisitions.

In September Trai had in principle favoured spectrum trading to be opened to private telecom companies also. In October an empowered ministerial group agreed to allow this.

badarinath@mydigitalfc.com

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