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India unveils main points of new telecom policy

16 февраля 2012

India Wednesday unveiled the broad contours of a new telecommunications policy that aims to simplify licensing rules, encourage mergers and acquisitions, and bring greater transparency in a sector tarnished by graft allegations.

This is the third time the government is formulating a policy for the sector, after 1994 and 1999. The new policy is part of efforts to clean up the sector following allegations of rigging in a sale of licenses and bandwidth in 2008 that led to the arrest of lawmakers and company executives, put the government under pressure and prompted the Supreme Court to cancel 122 licenses allotted without auctions.

The new policy prescribes a single license for the entire country in the future and also separates licenses from bandwidth, Communications Minister Kapil Sibal told reporters. The policy will be operative from now and the entire policy will be announced in April.

Currently, companies need separate licenses to operate in each of India's 22 telecom service areas and get bandwidth along with the permits. A single license indicates operators will have to forgo roaming charges that account for nearly 10% of their revenue.

The policy allows "quick" approval of mergers where the resultant entity won't have a market share--comprising of revenue and user base--of more than 35% or bandwidth of over 25% in a service area. Current rules capped market share at 40%, but analysts say rules didn't clearly specify the parameters and a previous limit of 14.4 megahertz of bandwidth for any combined entity has been a dampener.

Sibal said the government is considering allowing mergers where the combined entities can hold up to 60% of market share.

The policy caps the amount of bandwidth held by an operator, with all bandwidth to be paid for at market-determined prices. Operators would have to return the excess bandwidth they hold when they renew their licenses, typically valid for 10 years. But they can still get spectrum beyond the limit by bidding at an auction.

The policy also allows bandwidth sharing within a service area, except for third-generation telephony services.

Contentious issues such as charging a one-time fee for bandwidth held by telecom companies beyond the prescribed limit will be decided later, Sibal said.

Bharti Airtel Ltd., the nation's biggest mobile-phone operator by users, welcomed the policy, saying it would benefit the sector in the long run. It said the new takeover rules will pave the way for consolidation in the overcrowded sector.

Источник: Total Telecom

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