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Overview The Ministry of Communications & Information Technology, Government of India, has just come out with the decisions made by the Department of Telecommunications (DoT) on the issues of spectrum management and telecom licensing framework, largely accepting the recommendations of the Telecom Regulatory Authority of India (TRAI) on the same. TRAI will now give recommendation on some key areas like spectrum re-farming and pricing. The key decisions of DoT, as announced by the Ministry of Communications & Information Technology on February 15, 2012, are presented in the following bullet lists. Licensing
1. All future licences will be unified licences (ULs) and allocation of spectrum will be delinked from the licence. Spectrum, if required, will have to be obtained separately.
2. Validity of existing unified access service (UAS) licences may be extended for another 10 years at one time.
3. On extension, the UAS licensee will be required to pay a fixed fee: Rs. 2 crore for the Metro and category A Circles; Rs. 1 crore for category B circles; and Rs. 0.5 crore for category C circles.
4. The prescribed limit on spectrum will be 8MHz and 5MHz for GSM and CDMA technologies respectively, for all service areas other than Delhi and Mumbai, where the limits will be 10MHz and 6.25 MHz, respectively. However, the licensee can acquire additional spectrum beyond the prescribed limits in the open market, should there be an auction of spectrum, subject to the limits prescribed for the merger of licences.
5. The spectrum shall be paid for by separately. While extending the licence, the licensee shall be assigned spectrum only up to the prescribed limit, or the amount of spectrum assigned to it before the extension, whichever is less. Spectrum assigned to the licensee in excess of the prescribed limit shall be withdrawn.
6. Decisions on all matters relating to spectrum pricing will be taken separately.
Licence Fee
1. Uniform licence fee will be levied across all service areas, and this will be progressively made equal to 8% of the adjusted gross revenue (AGR) in two annual steps starting 2012-13.
2. Decision to bring passive infrastructure service providers under the licensing regime is deferred.
Overview The Ministry of Communications & Information Technology, Government of India, has just come out with the decisions made by the Department of Telecommunications (DoT) on the issues of spectrum management and telecom licensing framework, largely accepting the recommendations of the Telecom Regulatory Authority of India (TRAI) on the same. TRAI will now give recommendation on some key areas like spectrum re-farming and pricing. The key decisions of DoT, as announced by the Ministry of Communications & Information Technology on February 15, 2012, are presented in the following bullet lists. Licensing
1. All future licences will be unified licences (ULs) and allocation of spectrum will be delinked from the licence. Spectrum, if required, will have to be obtained separately.
2. Validity of existing unified access service (UAS) licences may be extended for another 10 years at one time.
3. On extension, the UAS licensee will be required to pay a fixed fee: Rs. 2 crore for the Metro and category A Circles; Rs. 1 crore for category B circles; and Rs. 0.5 crore for category C circles.
4. The prescribed limit on spectrum will be 8MHz and 5MHz for GSM and CDMA technologies respectively, for all service areas other than Delhi and Mumbai, where the limits will be 10MHz and 6.25 MHz, respectively. However, the licensee can acquire additional spectrum beyond the prescribed limits in the open market, should there be an auction of spectrum, subject to the limits prescribed for the merger of licences.
5. The spectrum shall be paid for by separately. While extending the licence, the licensee shall be assigned spectrum only up to the prescribed limit, or the amount of spectrum assigned to it before the extension, whichever is less. Spectrum assigned to the licensee in excess of the prescribed limit shall be withdrawn.
6. Decisions on all matters relating to spectrum pricing will be taken separately.
Licence Fee
1. Uniform licence fee will be levied across all service areas, and this will be progressively made equal to 8% of the adjusted gross revenue (AGR) in two annual steps starting 2012-13.
2. Decision to bring passive infrastructure service providers under the licensing regime is deferred.
Further, the DoT decisions allow the Telecom Service Providers (TSPs) to acquire additional spectrum beyond the prescribed limits in the open market, should there be an auction of spectrum, subject to the condition that any TSP would not hold more than 25% of the total spectrum allocated in the given circle. Positive impact of licence fee revision While TRAI had recommended reduction of the licence fee from the present 6-10% of AGR (depending on the circle) to a uniform 6% across all circles by 2015-16, DoT has decided on a uniform license fee of 8% in two annual steps starting 2012-13. This is likely to have a positive impact on the cost structures of most TSPs whose licence fee expense as a percentage of their AGR is in the range of 8.4-9.2% (for the quarter ended September 2011),
Typically, the circles in which the licence fee as a percentage of AGR is 6% are also the ones where the teledensity is low (44-60%, except in Himachal Pradesh, as against the 92% teledensity in the remaining circles3). Making the licence fee uniform at 8% in all circles may discourage TSPs from expanding their presence in the low-teledensity circles, as expansion would mean paying a higher licence fee. Norms on spectrum pricing yet to be decided
While DoT has largely followed the TRAI recommendations on several issues, spectrum pricing remains the crucial piece missing. Spectrum pricing has wide-implications for the future funding requirements of the
Typically, the circles in which the licence fee as a percentage of AGR is 6% are also the ones where the teledensity is low (44-60%, except in Himachal Pradesh, as against the 92% teledensity in the remaining circles3). Making the licence fee uniform at 8% in all circles may discourage TSPs from expanding their presence in the low-teledensity circles, as expansion would mean paying a higher licence fee. Norms on spectrum pricing yet to be decided
While DoT has largely followed the TRAI recommendations on several issues, spectrum pricing remains the crucial piece missing. Spectrum pricing has wide-implications for the future funding requirements of the
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Overview The Ministry of Communications & Information Technology, Government of India, has just come out with the decisions made by the Department of Telecommunications (DoT) on the issues of spectrum management and telecom licensing framework, largely accepting the recommendations of the Telecom Regulatory Authority of India (TRAI) on the same. TRAI will now give recommendation on some key areas like spectrum re-farming and pricing. The key decisions of DoT, as announced by the Ministry of Communications & Information Technology on February 15, 2012, are presented in the following bullet lists. Licensing
1. All future licences will be unified licences (ULs) and allocation of spectrum will be delinked from the licence. Spectrum, if required, will have to be obtained separately.
2. Validity of existing unified access service (UAS) licences may be extended for another 10 years at one time.
3. On extension, the UAS licensee will be required to pay a fixed fee: Rs. 2 crore for the Metro and category A Circles; Rs. 1 crore for category B circles; and Rs. 0.5 crore for category C circles.
4. The prescribed limit on spectrum will be 8MHz and 5MHz for GSM and CDMA technologies respectively, for all service areas other than Delhi and Mumbai, where the limits will be 10MHz and 6.25 MHz, respectively. However, the licensee can acquire additional spectrum beyond the prescribed limits in the open market, should there be an auction of spectrum, subject to the limits prescribed for the merger of licences.
5. The spectrum shall be paid for by separately. While extending the licence, the licensee shall be assigned spectrum only up to the prescribed limit, or the amount of spectrum assigned to it before the extension, whichever is less. Spectrum assigned to the licensee in excess of the prescribed limit shall be withdrawn.
6. Decisions on all matters relating to spectrum pricing will be taken separately.
Licence Fee
1. Uniform licence fee will be levied across all service areas, and this will be progressively made equal to 8% of the adjusted gross revenue (AGR) in two annual steps starting 2012-13.
2. Decision to bring passive infrastructure service providers under the licensing regime is deferred.
Overview The Ministry of Communications & Information Technology, Government of India, has just come out with the decisions made by the Department of Telecommunications (DoT) on the issues of spectrum management and telecom licensing framework, largely accepting the recommendations of the Telecom Regulatory Authority of India (TRAI) on the same. TRAI will now give recommendation on some key areas like spectrum re-farming and pricing. The key decisions of DoT, as announced by the Ministry of Communications & Information Technology on February 15, 2012, are presented in the following bullet lists. Licensing
1. All future licences will be unified licences (ULs) and allocation of spectrum will be delinked from the licence. Spectrum, if required, will have to be obtained separately.
2. Validity of existing unified access service (UAS) licences may be extended for another 10 years at one time.
3. On extension, the UAS licensee will be required to pay a fixed fee: Rs. 2 crore for the Metro and category A Circles; Rs. 1 crore for category B circles; and Rs. 0.5 crore for category C circles.
4. The prescribed limit on spectrum will be 8MHz and 5MHz for GSM and CDMA technologies respectively, for all service areas other than Delhi and Mumbai, where the limits will be 10MHz and 6.25 MHz, respectively. However, the licensee can acquire additional spectrum beyond the prescribed limits in the open market, should there be an auction of spectrum, subject to the limits prescribed for the merger of licences.
5. The spectrum shall be paid for by separately. While extending the licence, the licensee shall be assigned spectrum only up to the prescribed limit, or the amount of spectrum assigned to it before the extension, whichever is less. Spectrum assigned to the licensee in excess of the prescribed limit shall be withdrawn.
6. Decisions on all matters relating to spectrum pricing will be taken separately.
Licence Fee
1. Uniform licence fee will be levied across all service areas, and this will be progressively made equal to 8% of the adjusted gross revenue (AGR) in two annual steps starting 2012-13.
2. Decision to bring passive infrastructure service providers under the licensing regime is deferred.
Further, the DoT decisions allow the Telecom Service Providers (TSPs) to acquire additional spectrum beyond the prescribed limits in the open market, should there be an auction of spectrum, subject to the condition that any TSP would not hold more than 25% of the total spectrum allocated in the given circle. Positive impact of licence fee revision While TRAI had recommended reduction of the licence fee from the present 6-10% of AGR (depending on the circle) to a uniform 6% across all circles by 2015-16, DoT has decided on a uniform license fee of 8% in two annual steps starting 2012-13. This is likely to have a positive impact on the cost structures of most TSPs whose licence fee expense as a percentage of their AGR is in the range of 8.4-9.2% (for the quarter ended September 2011),
Typically, the circles in which the licence fee as a percentage of AGR is 6% are also the ones where the teledensity is low (44-60%, except in Himachal Pradesh, as against the 92% teledensity in the remaining circles3). Making the licence fee uniform at 8% in all circles may discourage TSPs from expanding their presence in the low-teledensity circles, as expansion would mean paying a higher licence fee. Norms on spectrum pricing yet to be decided
While DoT has largely followed the TRAI recommendations on several issues, spectrum pricing remains the crucial piece missing. Spectrum pricing has wide-implications for the future funding requirements of the
Typically, the circles in which the licence fee as a percentage of AGR is 6% are also the ones where the teledensity is low (44-60%, except in Himachal Pradesh, as against the 92% teledensity in the remaining circles3). Making the licence fee uniform at 8% in all circles may discourage TSPs from expanding their presence in the low-teledensity circles, as expansion would mean paying a higher licence fee. Norms on spectrum pricing yet to be decided
While DoT has largely followed the TRAI recommendations on several issues, spectrum pricing remains the crucial piece missing. Spectrum pricing has wide-implications for the future funding requirements of the
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