India issues new draft telecoms policy

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India’s telecoms regulator, the TRAI, has issued draft guidelines for the way spectrum is to be allocated in the country, ahead of the 2G spectrum (re)auction due to be held later this year.

The new policy aims to simplify licensing rules, encourage mergers and acquisition and provide greater transparency following India’s 2G spectrum scandal which resulted in the recent cancellation of 122 licences.

Currently, licences are awarded in India for each if the country’s 22 separate circles, or service areas. The TRAI now intends to instead award licences across the entire country, meaning operators will miss out from revenue from customers roaming as they travel across Indian states.

However, licences awarded to provide services will be sold separately to spectrum, potentially opening the market up for operators to trade 2G spectrum. However, the policy does not allow  for spectrum sharing among those holding 3G spectrum and the releated existing licenses.

Companies which acquire spectrum will also be charged a uniform licence fee of eight per cent based on their adjusted gross revenue over 2012-2013.

The new guidelines will also allow increase the threshold of market share resulted from mergers from 30 per cent, paving the way increased consolidation in the telecoms market.

“Mergers up to 35 per cent market share of the resultant entity will be allowed through a simple, quick procedure,” Telecom Minister Kapil Sibal is reported as telling journalists in India.

He added that the government would also consider cases of mergers that result in obtaining market share beyond 35 per cent in certain circumstances, as long as it does not breach the 25 per cent cap on GSM spectrum and 10Mhz for CDMA spectrum holding.

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