No new spectrum rates on selling stake to non-telcos: DoT Secy

"This (Cabinet decision) is not about the sale of equity. This decision is about mergers of licences," Telecom Secretary R Chandrashekhar said.

Updated: Jan 06, 2013, 13:18 PM IST

New Delhi; Telecom operators holding spectrum assigned to them at the old rate of Rs 1,658 crore can sell stake to a non-telecom services company but the sale will not invite the conditions spelt out by Cabinet late last year, a top DoT official said.

The government on November 8, 2012 decided that in case a company, which holds spectrum assigned to it at old rates, is acquired by another company then the resultant company will be charged for airwaves it holds at new rates on a pro-rata basis for the remaining period of validity of the licences.

"This (Cabinet decision) is not about the sale of equity. This decision is about mergers of licences," Telecom Secretary R Chandrashekhar said.

The new rate of spectrum was determined for 18 out of 22 circles in auction which ended on November 14, 2012. GSM spectrum in telecom service area of Delhi, Mumbai, Rajasthan and Karnataka did not attract any bidders in the recent auction and the government is in process of re-auctioning airwaves in these circles at 30 percent lower prices.

The new prices of spectrum are around 7 times higher than the old rate.

The decision by the government was taken to check skipping of auction by companies held in November 2012 and their attempt to secure spectrum based on the old rate of Rs 1,658 crore for 4.4 Mhz of pan-India spectrum by acquiring a telecom operator whose licences were not cancelled by Supreme Court in February 2012.

"This decision, that in the event of a merger the spectrum of the acquired company has to be paid for, avoids the option for a company which wants to acquire spectrum from having a possibility of acquiring a company and getting spectrum at much cheaper price while avoiding auction," Telecom Secretary said.

When asked if Cabinet decision has any impact on sale of equity by old telecom operator to a non-telecom licence holding firm, he said that existing norms are applicable on the sale of equity.

"For that there are separate provision with regards to share transfer which are there in the licence and certain procedures for change in the share holding pattern which requires the government to be informed and as per those procedures changes can be made," Chandrashekhar said.

The present licence condition checks sale of equity by a person whose share capital is 10 percent or more till completion of three years from the date licences (Unified Access Services Licences) of the companies were issued or till fulfilment of all the roll-out obligations in the licence condition.