Telecom panel gives nod to uniform licence fee of 8 percent

TRAIThe Telecom Commission paved the way for a uniform licence fee of 8% for telecom companies, from 6-10 % at present, and has “not ruled out” levying a one-time fee on operators holding spectrum beyond 6.2 mega hertz. It also decided to allot additional spectrum in future only via the auction route.

Telecom secretary R Chandrasekhar told reporters after a marathon meeting that the inter-ministerial body has “by and large” accepted the Telecom Regulatory Authority of India’s (Trai) proposals on mergers and acquisitions rules.

This means that in case of a merger between two telecom service providers, the combined entity should have a market share of under 35%. Further , the merged entity’s total spectrum holding should be less than 25% of the total airwaves available to telecom operators in a circle. In case the market share exceeds the 35% but remains under 60% Trai will carry out detailed examination to ensure that there is no market dominance, Chandrasekhar , who heads the Telecom Commission said.

This is a relaxation over the present regime, which mandates a 40% on the merged entity’s market share. Besides, they stipulate that the combined entity can retain 14.4 MHz or units of spectrum and the remaining has to be returned to the government .

The twin moves are expected to facilitate M&A in the Indian market which has more than a dozen operators in a circle leading to intense tariff war. Experts and telecom company executives cite the global experience of five-six operators per operation area to make the business profitable.

In addition, the Telecom Commission has also accepted the proposal related to spectrum sharing by telecom companies.

A one-time fee on those holding excess spectrum is expected to put cost pressure on several existing telecom companies ranging from BSNL and MTNL to Bharti and Vodafone. “We will be furnishing the recommendations to the government now and after that those items that need cabinet approval will go to the cabinet,” Chandrasekhar said.

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