EGoM to discuss spectrum price tomorrow
An Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, is likely to meet tomorrow to discuss crucial issues of spectrum price, payment terms and network roll-out obligations for auction of airwaves due before August 31.
June 20, 2012 / 18:23 IST
An Empowered Group of Ministers, headed by Finance Minister Pranab Mukherjee, is likely to meet tomorrow to discuss crucial issues of spectrum price, payment terms and network roll-out obligations for auction of airwaves due before August 31.
As part of terms for payment, the EGoM would discuss if telecom companies can mortgage spectrum or airwaves for seeking loans from banks and financial institutions, official sources said.Sector regulator Telecom Regulatory Authority of India (TRAI) has recommended an auction start price of Rs 3,622 crore per megahertz of airwaves frequency which amounts to over Rs 18,000 crore for pan-India business of new companies or companies whose licences were cancelled by Supreme Court on February 2.Industry says the TRAI set the base price too high and would drive away investors. The airwaves are crucial for mobile telephony service providers as it is used to transmit wireless signal.Sources said if EGoM was approve mortgage of spectrum, this be first time where banks will be able lend money against airwaves which are not a physical asset.The EGoM is also expected to discuss on the option of staggered payment option for telecom companies to pay the final spectrum price as per recommendation made by TRAI. The regulator has recommended to initially take 33% of final price of spectrum achieved in auction, two yeas
moratorium thereafter and companies should pay balance of spectrum price in installment over a period of 10 years. However, this was not approved by Telecom Commission, the inter-ministerial panel at Telecom Ministry.Uninor, one of the companies whose pan-India licence was cancelled and is looking to bid for spectrum, said "The challenge arising from upfront payments is not one of unwillingness but inability."The company added that it has concluded informal discussions with several Indian banks but no bank is willing to lend such amounts upfront to a new operator to fund the spectrum costs.Telecom companies, whose licences were cancelled, had been opposing network roll-out condition recommended by Trai and this issue is also one of the agenda for EGoM meeting. TRAI has recommended that companies winning spectrum in auction should cover 50% villages having a population of up to 2,000 within three years. Companies have said forcing this condition will adversely impact their business. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
