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Trading in spectrum likely to be reality soon

The government may soon permit trading of spectrum. In its report on the pricing and allocation of spectrum, an inter-ministerial committee has said that companies owning spectrum may be allowed to sell it to other players. They will, however, have to pay a spectrum trading charge to the government.

business Updated: May 03, 2009 22:42 IST
Manoj Gairola

The government may soon permit trading of spectrum. In its report on the pricing and allocation of spectrum, an inter-ministerial committee has said that companies owning spectrum may be allowed to sell it to other players. They will, however, have to pay a spectrum trading charge to the government. As of now, trading in spectrum is not allowed.

Under the existing licensing regime, spectrum is bundled along with the licences. When a company pays the fee for a unified access service licence (UASL), it is entitled for a start up spectrum of 4.4 MHz, issued on a first-come-first-served basis. Additional spectrum is allotted on the basis of number of subscribers that the company manages to secure.

Therefore, independent trading of spectrum is not feasible.

The inter-ministerial committee report proposes to delink spectrum from licences. The committee has proposed that a company would be required to get a licence to offer the service. But spectrum would be priced separately, at a price to be determined through a multi-stage auction. This would make trading of licences feasible.

The committee has also proposed that companies pay spectrum trading charges even in the case of mergers and acquisitions. This proposal comes from the fact that in the case of mergers and acquisitions, spectrum contributes significantly towards valuation of the company.

Recently, two new licence holders —Swan and Unitech — attracted foreign investors at high valuations even though they had not rolled out networks.

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