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Spectrum Price: Govt to consider load on banks & int'l pacts

Last Updated: Sunday, July 1, 2012 - 20:43

New Delhi: Telecom players may get some relief as the government will take into account lending capacity of banks and impact of its decision on international arbitration while taking a final call on matters related to spectrum price.

"Load on banking sector, their exposure to a particular sector and international arbitration will be taken into account before taking final decision (on spectrum price and payment terms)," a senior government official involved in decision making process said.

Finance and Telecom Ministry are working on a tripartite agreement to facilitate financing of payment for spectrum auction. The provision to mortgage airwaves for loan is one of the point of discussion for EGoM on Monday.

"The spectrum base price decision has bearing on spectrum price policy which cabinet has to decide. If cabinet decides to make operators pay for airwaves at new rates then exposure of banks will be high. All these checks and balances will be kept in mind before making decision," the official said.

DoT has circulated draft cabinet in which it has proposed to charge existing operators at new rates for all spectrum held by them or spectrum above 4.4 Mhz which was given to them with licence or above 6.2 Mhz which was recommended by TRAI.

"Decision specifically related to the amount to be paid by operators upfront or in installments will be decided on capacity of banks to lend money. Cabinet decision also has to be in place before the auctions," the official said.

However, a top official in DoT said that it has not yet received inputs from ministries on its draft cabinet note.

TRAI has recommended minimum price of Rs 3,622 crore for a megahertz of airwaves that are used for transmitting wireless signals for telecom services. It amounts to over Rs 18,000 crore on pan-India level for a new operator. The price is double for airwaves frequency used for CDMA services.

The minimum amount that companies jointly will have to shell out in airwaves auction due before August 31 comes around Rs 81,000 crore.

A PriceWaterhouseCoopers report said that debt burden on telecom industry till March 2012 was around Rs 185,720 crore out of which domestic banks have funded Rs 93,594 crore.

Government has also been served various notices under bilateral trade agreements with allegations of failing to protect investment from firms whose permits to provide telecom services were cancelled by Supreme Court.

Though it has conceded to some of the request of Norwegian firm Telenor for more slot for auction and relaxing network roll-out obligation, it has yet to respond to the request of Russian Conglomerate Sistema JSFC, which has threatened to quit India if the minimum spectrum price is not reduced.


First Published: Sunday, July 1, 2012 - 20:43
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