New Delhi: The Empowered Group of Ministers Thursday allowed existing players to retain a maximum of 2.5 MHz in prime band spectrum when their current licences expire, provided they pay a price which will be determined later through auction.
The EGoM also decided that companies will have to pay a market price if they merge or acquire another company which was allocated spectrum at old price of Rs 1,658 crore.
"Telecom companies will be allowed to retain 2.5 Mhz of spectrum in 900 Mhz band but they will have to pay market determined price decided through auction. The auction for 900 Mhz band will be conducted 18 months in advance from date licence of telecom companies expires," sources said.
Telecom regulator TRAI has recommended that existing operators give up all their spectrum holdings in prime 900 Mhz band when their permits come up for renewal starting November, 2014. The government has in principle approved the TRAI recommendation.
Telecom Minister Kapil Sibal after the EGoM meeting said, "EGoM has decided on what needs to be done for all those who have 5 MHz spectrum."
The EGoM, headed by Finance Minister P Chidambaram, took the decision based on the recommendation of the Department of Telecommunications.
The Telecom Commission had earlier recommended that existing operators give up all airwaves in 900 MHz.
On mergers and acquisitions, the EGoM decided that companies would to pay the market price if they acquire spectrum from another company which was allocated spectrum at old price of Rs 1,658 crore.
"... In the context of merger and acquistion what is the price that would have to be paid if the acquiring company has to acquire spectrum given to a company at an administered price, which is Rs 1,658 crore, thats one decision that has been taken," Sibal said.
Sources said the decision was taken to create level playing field for the companies that are participating in auction to buy pan-India spectrum at minimum price of Rs 14,000 crore and those who wanted to take acquisition route to acquire spectrum.
Without disclosing details, Sibal said that the decision taken by EGoM on mergers and acquisitions will be placed before the Cabinet for approval.
"Hopefully the Cabinet will meet on November 8. The decision taken today, except on refarming, and those that were decided by EGoM will be placed before Cabinet," Sibal said.
The decision on refarming today gave partial relief to incumbent players.
Citing a report by Analysys Mason on TRAI's recommendations on spectrum refarming, COAI said it will lead to increase in tariffs and loss of connectivity, thereby affecting both the consumers and the industry severely.
COAI has said that total impact on account of Capex, Opex, cost for deploying new towers and write-offs is estimated to be about Rs 1,15,500 crore.
Sectoral regulator TRAI in its clarifications has told DoT that existing players that seek to retain 2.5 MHz would have to pay the auction discovered price for it.
The Authority added that if operators bid, in addition to the 2.5MHz which they retain, a maximum of 2.5MHz extra could be obtained through auction.
"This will permit them to garner up to 5MHz of spectrum which is the quantum required to provide high technology services," it said.