India approves spectrum and licensing changes

India’s Telecom Commission has rubber-stamped a raft of new policy changes, including the setting of a universal licence charge and a restriction on spectrum ownership. The new rules will be the first step towards “redrawing the Indian telecom landscape,” reports India’s Economic Times, and could be implemented by October this year. The “uniform revenue share” for operators has been set at 8.5 percent of annual sales. Currently, operators pay between 6-10 percent of annual revenues as a licence fee, depending on their area of operation (the highest 10 percent charge is levied in the metros and category A circles). According to the report, the Commission’s setting of a universal fee means it has rejected proposals from industry body, Trai, which called for the revenue share to be reduced gradually over the next four years to 6 percent, allowing the industry to save about INR6,500 crore (US$1.5 billion) in levies by 2014.

In terms of spectrum, the Commission cleared Trai’s plan that mobile operators be given the contracted amount of airwaves – 6.2MHz for GSM and 5MHz for CDMA – at a price fixed by the regulator equivalent to the market value of spectrum at that time. This could be bad news for large players such as Bharti Airtel, Vodafone Essar and Idea Cellular, which currently hold up to 10MHz of 2G airwaves in many regions, and will be given only 6.2MHz when they renew their permits at market rates. Operators will be required to return spectrum above the prescribed limit, though it is not yet clear if they will be fined for sitting on excess airwaves. The panel decided that all existing mobile licences will be delinked from spectrum in the future, and will be renewed only for a 10-year period after their current (20-year) licences expire.

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