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Cabinet approves EGoM's proposals on GSM spectrum pricing and sharing

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Harmeet
New Update

Cabinet, in a meeting held on November 8th, has approved the recommendations by the Empowered Group of Ministers (EGoM) on pricing of spectrum for GSM. Cabinet has informed that it would decide charging for CDMA spectrum holding beyond 2.5 MHz later in a seperate meeting.

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As per the Cabinet's decisions:

1. Telecom service providers (TSPs) would not be levied one time charge for holding spectrum upto 4.4 MHz (GSM).

2. For all spectrum holdings beyond 4.4 MHz (GSM), a onetime charge would be levied prospectively upon the existing operators at 2012 auction determined price.

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3. For spectrum held above 6.2 (GSM), a one-time charge would be levied from July 2008 onwards. There will be two prices. The price, pro-rated for the period July 2008 upto the date of applicability of auction determined price, would be the 2001 entry fee divided by 6.2, duly indexed using State Bank of India Prime Lending Rate (SBI PLR). With effect from the date of commencement of the first quarter following the date of the Cabinet decision the auction determined price would be levied.

4. Licensees will be given the option to surrender spectrum beyond 4.4 MHz (GSM) if they do not wish to pay the charge.

5. The licensees will be allowed equated annual instalments for the balance number of years of license (such that the last instalment is payable not later than 12 calendar months prior to expiry of the license) considering interest rate at 9.75% as approved by the Ministry of Finance in the case of new successful bidders for deferred payment. The licensees will also have the option of full upfront payment or pre-payment of one or more instalments.

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Besides this, Cabinet has given its consent on sharing of spectrum and intra service area merger also:

1. Cabinet has permitted sharing of spectrum between TSPs that have both paid for spectrum beyond 4.4 MHz (GSM), without any additional one-time spectrum charge. Both TSPs would have to pay spectrum usage charge at the slab rate applicable on the entire combined spectrum holding.

2. If an acquired company holds spectrum against the entry fee paid, the acquiring company would be required to pay to the Government, the differential between the entry fee, and the current auction determined price, on a pro-rata basis for the remaining period of validity of the licenses.

3. On the issue of allotment of initial spectrum to licensees who have paid the requisite fee but have not been allotted spectrum so far, the Cabinet decided that the claim of such company for allotment of 4.4 MHz of spectrum in such case will be considered after completion of the auction process but this would be subject to availability of spectrum.

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