Highlights of spectrum trading for telecoms approved by India Govt

India telecom tower

India government has approved guidelines on Spectrum Trading.

Earlier, DoT or the Department of Telecommunications have shared the guidelines for trading of spectrum on August 12.

Telecom industry captains are speculating that the spectrum trading norms will propel the almost dead merger and acquisition (M&A) market in India. Telecoms will also be in a position to improve quality of services (QoS) by adding additional spectrum. Earlier, some of the telecoms were not happy with the 1 percent fee payable to the government.

Reliance Communications is planning to acquire the telecom business of Sistema in India. Today’s guidelines can be a boost for telecoms which are looking for acquisitions.

Highlights of spectrum trading guidelines:

# Spectrum trading will be allowed between two service providers only outright transfer of right to use the spectrum from the seller to the buyer shall be permitted.

# Spectrum trading will not alter the original validity period of spectrum assignment as applicable to the traded block of spectrum.

# The seller need to clear all his dues prior to entering into any agreement for spectrum trading. Any dues recoverable up to the effective date of transfer will be the liability of the buyer.

# The Government will be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the transfer, which was not known to the parties at the time of the effective date of transfer, from the buyer or seller, jointly or severally.

# A licensee will not be allowed to trade in spectrum if the licensee had breached the terms and conditions of the licence.

# Spectrum Trading will be permitted only on a pan-LSA (Licensed Service Area) basis. In case the spectrum assigned to the seller is restricted to part of the LSA by the Licensor, then, after trading, the rights and obligations of the seller for the remaining part of the LSA with regard to assignment of that spectrum shall also stand transferred to the buyer.

# All access spectrum bands earmarked for Access Services by the Licensor will be treated as tradable spectrum bands.

# Spectrum can be traded which has either been assigned through an auction in the year 2010 or afterwards, or on which the Telecom Service Provider (TSP) has already paid the prescribed market value.

# Trading of spectrum in 800 MHz band acquired in the auction held in March 2013 will be permitted only if the differential of the latest auction price and the March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid.

# Buyer will be allowed to use the spectrum acquired in 800 MHz/1800 MHz band through trading to deploy any technology by combining it with their existing spectrum holding in the same band after converting their entire existing spectrum holding into liberalized spectrum in that band as per the prevalent terms and conditions.

# The seller should clear its Spectrum Usage Charges (SUC) and its installment of payment (in case seller had acquired the spectrum through auction and opted for deferred payment) till the effective date of trade.

# A telecom service provider will be allowed to sell the spectrum through trading only after two years from the date of its acquisition through auction or spectrum trading or administratively assigned spectrum converted to tradable spectrum. In case of administratively assigned spectrum converted to tradable spectrum after paying the prescribed market value, period of two years will be counted from the effective date of assignment of spectrum.

# A non-refundable transfer fee of one percent of the transactional amount or one percent of the prescribed market price, whichever is higher shall be imposed on all spectrum trade transactions, to cover the administrative charges incurred by Government in servicing the trade. The transfer fee shall be paid by the buyer to the Government.

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