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Telecom digest: BSNL-MTNL merger options, content regulation, lack of spectrum & More

DoT weighing BSNL-MTNL merger options

The Department of Telecom is considering whether to de-list MTNL (Mahanagar Telephone Nigam Limited) and merge it into BSNL (Bharat Sanchar Nigam Limited) or listing BSNL and then finalizing the merger swap ratio based on the valuation of the two companies, reports the Economic Times.

The government is likely to run with the first option, as BSNL has accumulated losses upwards of Rs 30,000 crore which would make it difficult to get a decent valuation for the company on its own. MTNL is also currently facing Rs 14,600 crore in debt, a problem for the DoT since BSNL is unlikely to take on MTNL’s debts post-merger. However, MTNL is currently expecting a Rs 4534 crore refund from DoT for its share of 4G airwaves and is also planning to surrender its CDMA rights in the 800MHz band to further reduce debt.

TRAI chairman Rahul Khullar wants DoT M&A guidelines reworked

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During a recent ‘open house’ discussion with the telecom industry on pricing of airwaves in 1800 Mhz and 900 Mhz bands, TRAI chairman Rahul Khullar was critical of the mergers and acquisitions guidelines laid out by the DoT pointing out they did not facilitate consolidation, reports the Economic Times.

While the new M&A rules had raised the cap on the market share of a merged company in a circle from 35% to 50%, they had retained the clause that required buyers to pay market-linked spectrum prices for spectrum that came with any acquisition, increasing the cost of acquisition. Another hurdle is the clause that allows merged companies to hold only a maximum of 50% spectrum in a particular band and 25% of the spectrum allocated for the service area, in any given circle.

TRAI chairman says I&B should regulate content not DoT

At the recently concluded CII Big Summit 2014, Rahul Khullar the TRAI chairman said that the DoT should focus exclusively on carriage and carriage related issues, while matters regarding to regulating content should be handled by the Information and Broadcasting Ministry (I&B), reports Indian Television. He also said that politicians, state and central governments and their departments had ‘absolutely no business whatsoever to be in broadcasting space’ and this should be an integral part of the National Media Policy.

Khullar also noted three points for the component of the National Media Policy, firstly it should clearly articulate the need for a free, unhampered and unrestricted by the government media, secondly it should uphold plurality of views and opinions and thirdly it should start fixing the issues with infrastructure development.

DoT moves to the Supreme Court against TDSAT 3G verdict

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The Department of Telecom will challenge TDSAT’s judgement to allow Airtel, Vodafone and Idea to offer 3G services under intra-circle roaming (ICR) agreements in areas where they don’t own 3G spectrum, in the Supreme Court, reports BGR.

Previously the DoT had issued notices to the aforementioned companies in December asking them to stop 3G ICR in 24 hours for legal compliance, but the order was challenged by the telecom companies. Following the TDSAT judgement the telecom operators had then extended their service under 3G ICR across the country except in Odisha.

DoT to PMO: Lack of spectrum availability the reason for slow broadband

The Department of Telecom has informed the Prime Minister’s office that the primary reason for slow broadband speeds in the country is the lack of adequate allocated spectrum, reports the Hindu BusinessLine. The DoT mentioned that while operators in India have an average of 5-10 Mhz spectrum, operators in other countries had 20-30 Mhz spectrum.

The DoT said policies to make available more spectrum to mobile operators, along with favourable M&A norms to encourage consolidation, should be put in place. It also outlined the need for spectrum trading and sharing as the other means for operators to access more spectrum. Currently, of the 251 million Internet users in India only 14 million access it using wireline connections, with the rest of the users connecting via mobile devices.

Home ministry wants mandatory security clearance prior granting telecom licences

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The Home Ministry is suggesting that prior clearance from security agencies must be obtained by service providers before granting them telecom licences, reports Business World. The ministry also said that the clearance should include the past verification of directors and promoters of such firms.

Currently, the DoT gives licences to companies for providing mobile telephone services first and then seeks a security clearance from the Home Ministry, just before the service launches. This creates a problem if anything adverse is found during the security check as it gets difficult to revoke the licence once the applicant moves to court. The Home Ministry suggests that since security clearance can now be obtained within 12 weeks, delays will not be an issue and that prior verification will avoid the hassle of revoking licenses later.

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