The Hindu Business Line : DoT panel moots spectrum transfer fee for M&A

New Delhi, May 13 Merger and acquisition in the Indian telecom space could become expensive. A mobile operator acquiring spectrum from another pan-Indian mobile player will have to pay as much as Rs 570 crore per Mhz to the Government as spectrum transfer fee.

The committee, set up by the Department of Telecommunications to review of spectrum allocation policy, has suggested that operators should be asked to pay a transfer charge ranging between Rs 57 crore and Rs 2.5 crore per Mhz, for various circles, in the case of a merger or acquisition.

The five-member committee has finalised its report and submitted it to the DoT on Wednesday. According to the recommendations, the transfer charge for Tamil Nadu is the highest at Rs 57 crore per Mhz. The lowest fee is for Bihar at Rs 2.4 crore per Mhz.

This means that if a company acquires another mobile operator with a minimum of 4.4 Mhz spectrum then it will have to pay Rs 2,500 crore to the Government. This is higher than the Rs 1,600 crore paid by operators for acquiring the start-up spectrum.

The committee has added that the transfer charges should be discounted by 20 per cent for one year from the date of announcement of policy. The charge will be payable only for the first transfer or merger and only on that quantum. The prescribed fee is for a 20-year period. The fee will be reduced pro-rate based on the number of years remaining. So if the acquired company is an old licencee then the fee will come down proportionately.

Acquiring a new licencee would be more expensive. Spectrum assigned through auction or for which the market price has been paid will not attract any charge when transferred.

One-time fee

The committee has also suggested imposing a one-time spectrum fee on existing players with more than 6.2 Mhz spectrum in any circle. The fee will be derived from the 3G auction price. This means that if the Government gets Rs 4,000 crore from auctioning 5 Mhz of 3G spectrum, existing cellular players will have to cough out Rs 800 crore for each unit of spectrum beyond 6.2 Mhz.

The committee has also recommended auctioning of all fresh spectrum and doing away with the existing system of subscriber based criteria.

Operators who have already got a licence will be given start up spectrum of 4.4 Mhz for GSM and 2.5 Mhz for CDMA after which no one will get additional spectrum by way of subscriber base criteria.

The committee has pushed for allowing operators to trade their spectrum to another universal access licence holder.

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