Here is the take on remaining parts of the Recommendations of TRAI [Read Part 1 here] and its impact on Incumbent and New Telecom Operators in India.
For supra-1 GHz band: 33% of the bid amount to be paid initially then a moratorium of two years will be allowed and the balance payment to be made in 10 years (in equal installments). For sub-1 GHz band: 25% of the bid amount to be paid initially then a moratorium of two years will be allowed and the balance payment to be made in 10 years (in equal installments).
Positive for all stake holders including Government since it will have regular stream of income from leasing Spectrum.
…mortgage of spectrum may be allowed by spectrum holders to a registered Indian financial institution against borrowings. The mortgage will be subject to the condition that in the event of default of the liability, the spectrum shall be auctioned by the financial institution under the supervision of the DOT and all proceeds in excess of the liability shall be remitted to the Government…
Positive for Operators. However, we are not sure how RBI will ask the banks to make provisions for these loans, we certainly do not want a Systemic Risk.
…the Authority reiterates its recommendation regarding rural roll-out obligations as spelt out in 3rd November 2011 recommendations and that the measures contained therein should be made applicable to all spectrum holders.
Negative for Operators as the obligations are now more tilted towards Rural Areas to have inclusive Growth. But we can’t leave behind Indians and run, some compromise is needed here maybe tap USOF, etc.
Licensees who have acquired spectrum only through auction conducted here onwards shall be levied spectrum usage charge only at the rate of 1% of the Adjusted Gross Revenue…Licensees who have a mix of spectrum assigned administratively and spectrum acquired through auction and Licensees who have been assigned spectrum only through
administrative process shall be levied the spectrum Usage charges at the rate applicable on the administratively assigned spectrum and on the entire AGR…
This is Positive for any operator who gets spectrum through auction as they will have to pay only 1% of their AGR as SUC but please note that this does not give any relief to the incumbent operators and they would continue to pay their existing SUC unless they pay the one-time entry fee.
Will call charges go up with High Spectrum Reserve Price ? Well, TRAI chairman doesn’t think. It would have been prudent to set somewhat acceptable Reserve price and then let the Auction to take place and in any case since its open for all, fair market price would definitely be discovered.
One thing TRAI has ignored is, liberalized use of Existing CDMA Licenses for 3G EVDO Services by BSNL, Reliance Communications, Tata DoCoMo and MTS Siestema. Lets discuss this in a separate thread and take up the issue with TRAI and DoT.