Govt green-lights spectrum trading rules

10 Sep 2015

The Indian government has approved new guidelines for trading and selling spectrum, providing struggling operators with a potential exit route and paving the way for consolidation in the crowded sector. The Economic Times reports that the new rules permit cellcos to trade or sell airwaves across all bands, provided that the operators have held the frequencies for at least two years if they were allocated via auction or received through a deal. Operators wishing to sell government-allocated spectrum must first convert them into tradeable airwaves by paying the market price of the frequencies to the state.

A transfer fee of 1% of the deal value or the spectrum’s market price, whichever is higher, will also be levied on all transactions. Further, the government has ruled that proceeds from trading deals will be included in operators’ adjusted gross revenue (AGR), on which the cellcos pay spectrum usage charges and annual licence fees. The total amount of spectrum usable by a cellco, taking into account sharing and trading, cannot exceed 25% of all allocated spectrum in a circle, or 50% of the allocated airwaves in any band.

Whilst the introduction of the long-awaited guidelines has been welcomed by the industry, stakeholders have suggested that additional charges on the process could deter providers from making use of the new rules, with Rajan Mathews, director general of the Cellular Operators Association of India (COAI), quoted as saying: ‘While this is helpful to the industry and something which it has sought, double taxation and spectrum step-up in pricing will not make it a game-changer.’