Govt expected to charge INR30bn for RCOM/SSTL tie-up

11 Sep 2015

The Indian government’s recent rulings on spectrum trading and sharing is expected to complicate the proposed merger of Reliance Communications (RCOM) and Sistema Shyam TeleServices (SSTL), as the Russian-owned operator would be required to pay out an additional INR30 billion (USD450.5 million) to the government, the Economic Times reports. Under the new rules for trading spectrum, if an operator wishes to trade 800MHz frequencies awarded in the March 2013 auction it must pay the government the difference of the original price and the most recently discovered price (i.e. the March 2015 price). The additional charge is based on the fact that the airwaves awarded in March 2013 were non-contiguous, whilst the most recent allocation of 800MHz frequencies were contiguous, and therefore more valuable, as they can be used for 4G services.

Commenting on the issue, a spokesperson for SSTL was quoted as saying: ‘Regarding the issue relating to payout of any kind on account of spectrum contiguity, the matter is sub-judice with TDSAT [Telecom Dispute Settlement and Appellate Tribunal] since February 2015 and the company is hopeful of a favourable judgment in this regard.’ The spokesperson also stressed that talks regarding a tie-up with RCOM are ‘indicative and non-binding in nature.’

India, Reliance Communications (RCOM), Sistema Shyam TeleServices (SSTL, MTS India)