Telecom operators can mortgage spectrum: EGoM

Telecom Lead India: Mortgaging of spectrum will be a big
relief to Indian telecom operators which are finding difficulties to raise
funds from financial institutions.

The Empowered Group of Ministers (EGoM) on telecom has
approved in principle the proposal to allow telecom firms to mortgage spectrum
to raise funds from banks to buy airwaves.

Due the uncertainties in the telecom sector, financial
institutions are reluctant to lend money to mobile operators without a
securitized asset as collateral.

“It will be the banks that will take care of the
auction in close association with the DoT,” said Kapil Sibal, Minister of

“In other words the architecture of the auction will
be discussed with the DoT and the auctioneer shall be decided in consultation
with the DoT (Department of Telecom) but of course it will be the banks which
will auction the spectrum,” he added.

Some crucial decisions including the roll-out obligation
are yet to be finalized and thus the EGoM headed by Home Minister P.
Chidambaram will be meeting again the next week, according to IANS.

“We will be probably meeting again on Monday or
Tuesday to take a decision on the rollout obligation and some of the other
issues,” Sibal added.

The issue of pricing of spectrum will be dealt by the

The EGoM which was reconstituted after Agriculture
Minister Sharad Pawar opted out includes Sibal, Information and Broadcasting
Minister Ambika Soni, Defence Minister A.K. Antony, Law Minister Salman
Khurshid, and Minister of State in the Prime Minister’s Office V. Narayanasamy
as members.

The meeting also had before it the sector regulator’s
resentation on impact of pricing on tariff. TRAI has suggested that there
should not be more than 10 paise per minute hike in the tariffs.

TRAI had recommended a reserve price of Rs 3,622 crore
for 1 Mhz pan-India spectrum, which is around 10 times higher than the price at
which 2G licences were allocated in 2008 under then Telecom Minister A. Raja.

The telecom operators have warned of a 100 percent hike
in tariffs if the TRAI proposals are accepted.

According to PricewaterhouseCoopers, telecom tariffs are
expected to rise by 90 paise a minute in metros and 20-34 paise on an average
across the country if the sector regulator’s recommendations on spectrum
pricing are accepted.

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