The Telecom Regulatory Authority of India (Trai) on Tuesday released the working guidelines for spectrum trading, a policy that was earlier approved in-principle by the government. However, the guidelines now need to be approved by the government before it can be implemented.
Once implemented, trading will enable companies to sell their surplus radiowaves to operators facing a spectrum crunch. Spectrum trading is also expected to boost mergers and acquisitions in the sector. For instance, if an operator has 3G spectrum but not enough subscribers to justify a business case, it can be offered through trade to an operator who needs more.
According to the guidelines unveiled by Trai, spectrum trading between mobile operators will attract a 1% transfer fee on the transactional amount or prescribed market price, whichever is higher, and payable by the seller to the government.
While no prior permission would be required for trading in spectrum, the companies need to inform the government about any prospective trade six weeks prior to the effective date of trade. The sector regulator also proposed that trading should be permitted only on a pan-LSA (licensed service area) basis.
Spectrum cannot be traded for a part of a telecom circle. Moreover, trading is allowed only for those radiowaves that have been bought through an auction or paid for at market rates.
?Spectrum trading makes it possible for companies to expand more quickly than would otherwise be the case. It also makes it easier for a new market entrant to acquire spectrum in order to enter the market,? Trai said.
Trai also proposed that spectrum acquired through trading would attract a 5% flat usage fee similar to auctioned spectrum. The seller should clear its spectrum usage charges (SUC) and its installment of payment (in case seller had acquired the spectrum through auction and opted for deferred payment) till the effective date of trade. Post trading, the buyer will pay the spectrum usage fees as applicable.
A lock-in period of two years, has been recommended by the sector regulator, on the spectrum that a telecom operator acquires through trading before it can ?trade in it? again.
