EGoM on telecom approves spectrum mortgaging (Lead)

July 12th, 2012 - 10:39 pm ICT by IANS  

P. Chidambaram New Delhi, July 12 (IANS) The Empowered Group of Ministers (EGoM) on telecom Thursday approved “in principle” the proposal to allow telecom firms to mortgage spectrum to raise funds from banks in order to buy airwaves.

Given the uncertainties in the telecom sector, banks have been lately reluctant to lend money to these firms without a securitized asset as collateral.

“It will be the banks that will take care of the auction in close association with the DoT,” Minister of Communications, Kapil Sibal told reporters after the meeting here.

“In other words the architecture of the auction will be discussed with the DoT and the auctioneer shall be decided in consultation with the DoT (Department of Telecom) but ofcourse it will be the banks which will auction the spectrum,” he added.

The minister also said that some crucial decisions including the roll-out obligation are yet to be finalised and thus the EGoM headed by Home Minister P. Chidambaram will be meeting again the next week.

“We will be probably meeting again on Monday or Tuesday to take a decision on the rollout obligation and some of the other issues.”

He also emphasised that the issue of pricing of spectrum will be dealt by the EGoM. “There are some issues we will decide, some issues will be decided by the cabinet apart from the reserve price - that is our prerogative.”

Asked whether the EGoM would be able to take decision on spectrum allocation and pricing before the Supreme Court’s August 31 deadline expires, Sibal said: “We are trying very hard and lets see how far can we meet that schedule.”

The EGoM which was reconstituted after Agriculture Minister Sharad Pawar opted out includes Sibal, Information and Broadcasting Minister Ambika Soni, Defence Minister A.K. Antony, Law Minister Salman Khurshid, and Minister of State in the Prime Minister’s Office V. Narayanasamy as members.

The meeting also had before it the sector regulator’s resentation on impact of pricing on tariff. The Telecom Regulatory Authority of India (TRAI) has suggested that there should not be more than 10 paise per minute hike in the tariffs.

TRAI had recommended a reserve price of Rs.3,622 crore for 1 Mhz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under then Telecom Minister A. Raja.

The telecom operators have warned of a 100 percent hike in tariffs if the TRAI proposals are accepted.

According to consultants PricewaterhouseCoopers (PwC), telecom tariffs are expected to rise by 90 paise a minute in metros and 20-34 paise on an average across the country if the sector regulator’s recommendations on spectrum pricing are accepted.

The Supreme Court Feb 2 cancelled 122 licences issued in 2008 and asked the telecom department to redistribute these through an auction.

The EGoM had last met June 5 and had finalised some issues, including the quantum of airwaves to be sold.

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