Telcos to be allowed to use spectrum to raise funds

Source: Business Standard, Apr 8, 2014

New Delhi: The department of telecommunications and the department of economic affairs are considering the possibilities of adding spectrum in the harmonised list of infrastructure, to allow telecom companies to raise funds using spectrum as a tangible asset.

Spectrum qualifies for the infrastructure criteria, says a recent discussion note. “Therefore, it may be added in the harmonised master list of infrastructure.”

The development comes in the wake of repeated requests from telecom operators who have acquired spectrum from auctions in the past.

The government had earlier said that spectrum being government property, it cannot be used as an asset for raising funds. The Cabinet Committee had in May 2012 approved the harmonised master list of infrastructure in order to facilitate a coordinated approach among agencies providing support to infrastructure.

3g Growth in India Beats World Average

Source: Business Standard, Mar 27, 2014

Mumbai: Data traffic powered by third-generation (3G) services grew at 146 per cent in India last year, higher than 1the global average that saw use double, according to an MBit Index study by Nokia Siemens Networks (NSN).
Second-generation (2G) and 3G data combined grew 87 per cent, as 2G data growth stabilised, at 59 per cent. “The study also shows that 3G users continue to consume more data on average than 2G users,” NSN said.
The data consumed per subscriber for 3G is 532 megabytes (MB), against 146 MB for 2G. The use is much higher in major urban centers, at a gigabyte a month. “This indicates the rising popularity and uptake of 3G across India. In addition, premium tariff reductions in 3G services in early 2013 led to an increased migration of high-end 2G customers to 3G,” said NSN.
Half the growth in 3G comes from category A circles, which include large cities and metros. In these circles, 3G data traffic grew 185 per cent. These circles were also paid huge premia by operators to acquire licenses and spectrum in the auctions of 2010. Category B circles accounted to 31 per cent of the total traffic. The study says that both categories indicate a big demand of high-speed services.

Telecom sees sudden jump in FDI

Source: Business Standard, Mar 14, 2014

New Delhi: Economic Affairs Secretary Arvind Mayaram was the first to express concern about the steep fall in foreign direct investment (FDI) in telecom. In September 2013, he’d written to M F Farooqui, secretary in the department of telecommunications, asking him to take immediate steps to address the issue, as the decline had affected the country’s current account deficit.

The intervention seems well-timed. Between November and December 2013, FDI inflow in telecom suddenly jumped 155 per cent as compared with the total inflow during April-October 2013. And, this does not include Vodafone’s projected investment of Rs 10,141 crore for raising stake in its Indian entity, as the proposal was formally approved only last month.

Telecom sees sudden jump in FDI

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Bharti Airtel set to acquire Loop Mobile in a Rs 700-crore deal

Source: The Economic Times, Feb 17, 2014

MUMBAI: Bharti Airtel is set to acquire Loop Mobile in a Rs 700-crore deal that may be announced as early as this week in what will be the first consolidation move in the country’s telecom industry since 2008, taking India’s biggest operator to the top spot in Mumbai, three people involved in the deal told ET.

The deal will be via a slump sale, in which one or more undertakings are transferred for a lump sum, without values being assigned to individual assets and liabilities, the three people said. Kotak Mahindra Investment Bank is the sole advisor for the transaction, running the sale process, they said. There is no banker involved on behalf of Bharti Airtel.

Bharti Airtel

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Trai comes out with mobile banking tariff limit, guidelines

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New Delhi: The Telecom Regulatory Authority of India (Trai) announced consumer-centric recommendations as well as a tariff order on Tuesday that will help the cause of financial inclusion by enabling mobile banking, curb monopolies in cable networks, and allow people responding to an emergency (such as floods) keep in touch.

In a conference on the new mobile banking regulations on Wednesday, Trai chairman, Rahul Khullar said the aim is to keep costs low and enable access across the country.

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Telecom firms ready war chest ahead of spectrum auction

Source: The Hindu Business Line, Nov 26, 2013

New Delhi: With the Government outlining the broad contours of the spectrum auction, telecom companies are readying their respective war chest for the bidding to be held in January.

While Bharti Airtel is looking to raise money by issuing bonds in the European market, Vodafone is pumping in Rs 7,000 crore from the kitty it will get post selling stake in the US venture.

Other players, including Loop Mobile, Videocon Telecom and Sistema Shyam, are also interested in buying spectrum. Loop Mobile, for example, is looking to sell equity stake to strategic investors, in a bid to raise funds.

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Liberal M&A policy in telecom sector likely soon: Kapil Sibal

Source: The Economic Times, Oct. 31, 2013

NEW DELHI: The government expects to bring a “liberal” merger & acquisitions policy shortly which will enable much needed 1consolidation in the telecom industry and encourage greater investments by those keen to grow in the sector, telcom minister Kapil Sibal told ET.

“The merger and acquisition policy will be announced very soon, the last legs of policy framework are being finalised and once that is done you will get to know what they will be,” said Sibal on the sidelines of the launch of ETTelecom. com, a news portal dedicated to the telecom industry. Sibal had earlier said that he expects the M&A rules to be out by November 1.

The telecom industry, emerging from a bruising tariff war amid intense competition, has long sought rules that will spur consolidation. The industry has said that India’s market can at best accommodate five to six players. Currently, some of the country’s 22 circles have more than 10 operators.

On October 22, ET had reported that the government is planning far-reaching changes to rules on mergers and acquisitions in the fragmented telecom industry which could pave the way for bigticket deals. The most significant of the revisions from previous drafts is raising the limit on the market share of a merged entity in a circle to 50% from 35% earlier, which would have effectively prevented companies such as No. 1 Bharti Airtel from acquiring rivals.

The telecom department (DoT) has also decided to allow a merged entity to hold up to two blocks of 3G and broadband wireless access (BWA) spectrum as against one block each currently. However, despite industry opposition, DoT has stuck to its stand that companies will need to pay market price for the additional spectrum they get through acquisitions.

“The market will decide what the consolidation will be like and operators will decide on what the market can absorb,” Sibal added. The minister, however, declined to comment on controversial issues of spectrum pricing and auctioning of bandwidth in the 800 MHz band which is typically used by CDMA operators.

While the sector regulator has recommended slashing the floor price of spectrum in the 1800 MHz and 900 MHz bands by as much as 60%, and suggested that auctions shouldn’t be held for airwaves in the 800 MHz band for lack of demand, the telecom department is yet to take a decision on it.

The Telecom Commission, the highest decision-making body in the DoT, was expected to have met on Tuesday to take a call, but the meeting has been postponed until next week.

“We will take a decision as soon as possible. The decision will go to the Empowered Group of Ministers that will then take a call, which will be communicated to the Cabinet,” Sibal said.

Reliance Jio Infocomm to offer fixedline & wireless network services

Source: The Economic Times, Oct. 15, 2013

Mumbai: Reliance Industries-owned Reliance Jio Infocomm will offer fixed and wireless broadband Internet connections when it launches services, the parent said in its quarterly earnings release on Monday.

The objective of offering fixed-line services comes with additional capital expenditure to connect locations with cables.

A person familiar with developments said the company has obtained local authority permissions to lay nearly 100 kilometres of optic fibre cables every day in Mumbai and Delhi. The company did not confirm this.

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Bharti-Qualcomm deal faces regulatory hurdles

Source: Business Standard, Oct. 03, 2013

New Delhi: Qualcomm, which has sold its stake in Wireless Business Services to Bharti Airtel, India’s largest telecom services provider by subscriber base, may face regulatory hurdles.

According to a recent communication of the department of telecommunications (DoT), the telecom ministry is discussing if the new shareholding structure would be permissible under the licence agreement.

Qualcomm Asia Pacific, which had a 74 per cent stake in the venture, now holds just 6.55 per cent equity, while Airtel acquired a 93.45 per cent stake. At the time of buying the broadband wireless access (BWA) spectrum, the company was 13 per cent owned by Global Holding Corp, and Tulip Telecom had a 13 per cent stake, while Qualcomm Asia Pacific had the remaining 74 per cent stake.

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M&A guidelines for telcos likely by August 31

Source: Business Standard, Aug 22, 2013

New Delhi: The Department of Telecommunications (DoT) is likely to finalise the much-awaited merger and acquisition (M&A) policy for the telecom companies by August 31. While the draft M&A rules do not have specifics of the spectrum sharing, DoT will finalise the draft instructions on the matter by August 21, according to a recent internal discussion. The final M&A guidelines are likely to have specifics of spectrum sharing.2

DoT has noted in the draft M&A guidelines that telecom operators will have to surrender airwaves beyond the government prescribed limit if the merged or resultant entity’s spectrum holding goes beyond the limit.

Companies will get one year time for this, and the merger of licences will be restricted to the same service area. Also, the merged entity will have to migrate to the new Unified Licensing regime.

It also noted that the government will allow merger of up to 35 per cent market share of the resultant entity through a simple, quick procedure. Beyond this, M&A proposals will be considered case-to-case basis. However, the companies should not breach the 25 per cent cap on GSM spectrum or 10MHz for CDMA spectrum holding in any service area.

DoT will consider recommendations from the Telecom Regulatory Authority of India (Trai) if the market share of the merged entity goes up to 60 per cent. However, if the market share crosses 60 per cent, mergers will not be allowed.

The cap for spectrum holding for the merged entity will be 25 per cent of the total spectrum assigned and 50 per cent of the airwaves assigned in a given band. It can be by way of auction in the concerned service area in case of 900MHz and 1,800MHz bands. The ceiling for the 800MHz band will be 10MHz.

This will impose severe restrictions for the GSM operators for possible mergers. The top three GSM operators – Bharti Airtel, Vodafone India and Idea Cellular – together hold about 54 per cent market share, according to Trai data.

The internal discussion also noted that the merged or resultant entity shall be entitled to only one block of 4.4MHz of spectrum in GSM band or 2.5MHz in CDMA band for the entry fee paid. The discussion has referred to a previous decision of the Telecom Commission on this.

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