DoT may move cabinet on spectrum pricing

The department of telecom (DoT) is likely to move a cabinet note on spectrum pricing policy next week. It proposes to ask telecom companies whose licenses have not been impacted by the Supreme Court's 2G cancellation order to pay market determined price for spectrum currently held by them.

CNBC-TV18's Malvika Jain reports that the government is trying to provide a level-playing field for all telecom companies. The DoT feels that the level-playing field and sanctity of contract cannot go hand-in-hand. Therefore, they have moved this proposal to prospectively charge telecom companies.
The government is now mulling over four options. First, companies whose licenses have not been affected by the Supreme Court's 2G cancellation order be asked to pay for the entire spectrum that has been held by them.
The second option is that they will be asked to pay a market determined price for spectrum held beyond the initially granted 4.4 megahertz.
The third option would be levying charges additionally for spectrum held beyond 6.5 megahertz, which is the contracted spectrum.
Finally, the fourth option is that there should be no prospective charges. With DoT not in favour of imposing a prospective charge, there was a draft cabinet note that had been circulated. But none of the ministries have responded to DoT's proposal.
This is expected to impact the financials of the telecom companies, especially for the CDMA and the dual technology players because they will have to pay double the amount in comparison to the GSM players. But this is a part of a bigger deal, a bigger settlement, a possible settlement that has been provided to the telecom sector.
The GSM service providers will be impacted in another way, that is by refarming. Refarming now will not mean redistribution of spectrum, but possibly re-pricing. Since a 900 megahertz spectrum will be refarmed, it will impact the GSM operators. But, the clincher for this deal is expected to be the date from which a refarmed spectrum will be re-priced. Also watch the accompanying video.