M A I N   N E W S

Panel allows mortgage of 2G spectrum
Girja Shankar Kaura/TNS

New Delhi, July 12
The reconstituted Empowered Group of Ministers (EGoM) on telecom, which met here for the first time, have in principle decided to allow the mortgage of spectrum by telecom operators so that they can raise finances.

The seven-member panel which met under the chairmanship of Home Minister P Chidambaram also decided on the new timeline for the auction of the vacated 2G spectrum, which would also force the Department of Telecom (DoT) to seek further extension from the Supreme Court.

This was the first meeting of the panel under Chidambaram, who was asked to step in after Agriculture Minister Sharad Pawar chose to recuse himself from the panel. The panel decided to take a view on some of the other crucial issues like that of finalising the base price for the spectrum, allowing staggered payment by the operators and other roll-out obligations at the future meetings.

The next meeting of the EGoM could take place on July 16, sources said.

However, there was good news for the operators who have been asking the DoT to allow them to mortgage the spectrum with the lending institutions to allow them to raise finances.

Sources said that the EGoM had in principle agreed to allow the mortgage of spectrum. This will be first time where banks will be able to lend money against airwaves which are not a physical asset. However, it was still not clear as to how this would be implemented.

Sources also said that the panel had taken a view on the new timeline for completing the auction and with less than 50 court-allotted days left, it has now been decided that selection of an auctioneer would now be completed only by July 20 instead of the earlier scheduled date of July 5.

In a cascade effect, a letter of intent will then be issued only by July 26 instead of the earlier target date of July 10.

This will mean that an information memorandum detailing the auction guidelines will only be issued on August 22 instead of August 6, making it impossible for the government to meet the Supreme Court deadline.

Sources said that DoT would have no other option but to seek an extension from the Supreme Court for completing the auction process. The apex court has set a deadline of August 31 for the auction process to be completed.

Incidentally, the apex court has already extended the deadline once, saying licences issued to the new players will stand cancelled from September 7 onwards.

DoT is of the view that the auction may not be completed before November or even December.

The Supreme Court, had in February last, cancelled all the 122 licences doled out by former Telecom Minister A Raja and had asked the government to carry out fresh auctions for the 2G spectrum that was thus vacated.

The Telecom Regulatory Authority of India (TRAI) has recommended an auction start price of Rs 3,622 crore per megahertz of airwaves frequency, which amounts to over Rs 18,000 crore for a pan-India licence.

On the other hand, the DoT panel studying TRAI's proposals on spectrum auctions has concluded that reserve price for second generation airwaves in the 1800 MHz band should be revised to Rs 4,245 crore per unit (on a pan-India basis).

The meeting also discussed on telecom regulator TRAI's presentation on tariff impact. TRAI had suggested 10 paise per minute tariff impact.