Spectrum sale may block telecom mergers

DoT proposes a 5-year moratorium to avoid hoarding of spectrum and speculative bidding by telecos, report M Rajendran & Arun Kumar.

india Updated: Apr 25, 2007 22:05 IST

Mergers of telecom companies will not be allowed within five years of the auction of spectrum for third-generation (3G) services, which is expected to rake in Rs 30,000 crore (over $7 billion) for the government. 3G services offer high-speed data and streaming video over cellular networks.

The department of telecommunications (DoT) has introduced the moratorium on mergers to avoid hoarding of spectrum and speculative bidding by telecom companies in the online auction for radio frequencies on which ride voice and data sent and received by mobile phones. Spectrum is a scarce resource; the majority of it is held by the defence, railway, and information and broadcasting ministries.

The DoT, which examined the Telecom Regulatory Authority of India’s recommendations for auctioning spectrum for 3G services, has said the allotment for 3G the 2.1 GigaHertz frequency band be treated as standalone, separate from the spectrum doled out for 2G services.

“Mergers should not be allowed for five years after the initial allotment of spectrum. Even after this period, if mergers are permitted, the limit on the maximum spectrum the merged company can retain is recommended to be 2x15 MegaHertz,” the DoT said in a report.

Commenting on the additional spectrum allocation for 2G services, Communications Minister Dayanidhi Maran on Wednesday said, “By July, we will get an additional 42.5 MHz vacated from the defence forces and hope to get more spectrum for 3G services soon. It (3G spectrum) is expected to bring in additional revenue of about Rs 30,000 crore. We want more players, including foreign ones, to participate.”

Considering the limited spectrum availability, the DoT has also recommended that four service providers be allowed spectrum for 3G services in the 2.1 GHz band. Initially 2x10 MHz spectrum may be allowed to each of the four operators on terms to be decided by the government.

For security reasons Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd will be been jointly allotted spectrum.

First Published: Apr 25, 2007 21:59 IST