27-10-2012: India Government to bear BSNL and MTNL’s one-time spectrum charge of Rs 13000 crore...ET

The India Government is set to bear BSNL and MTNL’s one-time spectrum charge of Rs 13000 crore. Empowered Group of Ministers (EGoM) on spectrum has recently decided that the Centre will bear the cost for the one-time spectrum charge, estimated to be between Rs 12,000 crore to Rs 13,000 crore, that BSNL and MTNL will have to pay, Economic Times reported. This is a significant development for the ailing telecom PSUs. The decision follows communication from BSNL and MTNL about their inability to pay this amount. EGoM noted the request of BSNL and MTNL that government should provide necessary financial support to enable them to bear the cost of retention of spectrum beyond 4.4 MHz. This will enable them to continue to service their customers without necessitating fresh infrastructure investment. The inter-ministerial panel has also cleared the proposal to relax spectrum sharing rules for mobile phone companies. The panel of ministers also decided to do away with the provision to levy a special levy on mergers and acquisitions (M&As) in the sector. EGoM was of the view that mergers, in accordance with stipulated guidelines, lead to consolidation of spectrum and increased efficiency. Further, both parties to such merger would have paid for their respective spectrum holding in accordance with the decision on pricing of spectrum. Therefore, no additional charge need to be levied in the event of merger of such compliant licences. EGoM concurred with the proposal that in view of introduction of market-based pricing of spectrum, spectrum transfer charges of 5 percent may not be levied on the difference between the transaction price and the market price of spectrum.