It is surprising that despite Multi Billionaire Dollar Spectrum Scam, the same officers continue to occupy the seats of power and write the rules for M&A. We’d like to highlight without naming anybody on how Massive Corruption & Intense Lobbying is happening in the Indian Telecom Sector evident from the changing rules and funding to the pockets of Central Government Politicians & Officials.
The following TimeLine Shows the changing rules on M&A without anything emerging clearly,
2008 M&A rules
Spectrum Held by Resultant Entity had the following Binding Resultant entity shall be entitled to total amount of spectrum held by merging entities subject to the condition that the merged entity shall meet the prevailing spectrum allocation criterion within three months. Failure to do so, the Licensee shall surrender excess spectrum, if any. In addition, after the expiry of the three-month period, the spectrum charge shall be doubled every three months in case of excess spectrum held by post-merger licensee. Furthermore, specified spectrum transfer charges shall be paid within the prescribed period.
On Excess Spectrum – Discretion to choose the band to surrender the spectrum beyond the ceiling will be of the new entity.
Payment On merger, spectrum enhancement charge shall also be charged as applicable in case of any other UAS/ CMTS licensee.
May 2010, TRAI recommendations
On Spectrum – Consequent upon the merger of licences in a service area, the total spectrum held by the post-merger Resultant entity shall not exceed 14.4MHz for GSM technology. In respect of CDMA technology, the ceiling will be 10MHz.
DoT Contested by Saying Prescribed limit in other cases is 8/10MHz for GSM and 5/6.25MHz in case of CDMA. TRAI may indicate the rationale for the wide variation between the limit of spectrum that can be acquired through M&A and by regular procedure.
TRAI On Excess Spectrum – If total spectrum held by the resultant entity is beyond the limits prescribed, the excess spectrum must be surrendered. Discretion to choose the band to surrender the spectrum beyond the ceiling will be of the resultant entity.
DoT’s Contention It is viewed that keeping in view the requirement of refarming the spectrum, the choice of surrender should not be left to the merged entity. Government may prescribe the band which will be required to be surrendered in accordance with the spectrum refarming policy. TRAI may review this recommendation.
Payment – Resultant entity is entitled to only one block of 6.2MHz/5MHz for the entry fee paid. Either of the parties to the merger should pay the spectrum price i.e. the difference between the current price and the sum already paid, before permission for merger is granted. Spectrum transfer charge, @5% of the difference between the transaction price and the total current price, shall be payable.
TRAI Recommendations November 2011
On Spectrum – Consequent upon the merger of licenses in a service area, the total spectrum held by the resultant entity shall not exceed 25% of the spectrum assigned, by way of auction or otherwise, in the concerned service area in case of the 900MHz and 1,800MHz bands. In respect of the 800MHz band, the ceiling will be 10MHz. In
respect of spectrum in other bands, relevant conditions pertaining to auction of that spectrum shall apply.
On Excess Spectrum If total spectrum held by the resultant entity is beyond the limits prescribed, the excess spectrum must be surrendered. Government may prescribe, after obtaining the recommendation of TRAI, the band/s of spectrum to be surrendered.
Payments – Retains Views as expressed in May 2010 Recommendations.
So far, the largest impediment to M&A in the telecom space has been the Government’s stance on various issues with Agenda Driven Policies under the able leadership of Mr. Kapil Sibal famous for his Zero Loss Theory in the Telecom spectrum Scam that paralyzed the Indian Economy. In the next post we’ll discuss the changing rules of Spectrum Sharing in India.