India will unveil a much-awaited new telecoms policy on Monday, which is expected to include revised rules on grant and pricing of second-generation radio airwaves, in a bid to make the sector more transparent after it was hit by a massive scandal. The policy is also expected relax norms for mergers and acquisitions. India decided to overhaul its decade-old telecoms rules, after the an alleged scam in the grant of licences and radio airwaves in 2007/08 came to light late last year and a state auditor said the below-market price sale of licences could have lost the government up to $39 billion in revenue.
New rules in the new week (Image credit: Getty images)
Telecoms Minister Kapil Sibal will announce the draft National Telecommunications Policy-2011, at a news conference at 2 p.m. (0830 GMT) on Monday, according to a government invite to media. Sibal, who took over in last November after his predecessor resigned following charges of irregularities, has said the government will de-link 2G radio spectrum that now comes free with telecoms licences for future grants and ask companies to pay for spectrum based on market prices. The minister has also said companies will be asked to pay market-linked prices for 2G radio-spectrum holding beyond 6.2 mega hertz.
The new policy is expected to set the pricing mechanism for spectrum. The sector regulator has suggested a pricing formula for the so called “excess spectrum”, which if accepted by the government, would see leading companies such as Bharti Airtel, Vodafone Essar and Idea Cellular pay hundreds of millions of dollars. To help consolidation in a crowded 15-player market, the government is also set to relax rules for mergers and acquisitions, with the current rules seen as restricting deals in the sector.
Sibal has previously said that the number of players in a telecoms zone should not fall below six, including the state-run operator. Under current rules, one company is not allowed to hold 10 percent or more in two competing operators in a telecoms zone. Also, new licensees are not allowed to sell out and exit within three years of operations. When two operators merge their combined revenue or subscriber share is not allowed to exceed 40 percent of the total revenue and subscribers in that zone. New rules are also set to be framed on issues such as renewal of telecoms licences and to allow companies to share radio spectrum. Sibal has said telecoms licences should be renewed for 10 years compared with 20 years currently.