One Time Spectrum Charges Payable on M&A, the proposal of the Planning Commission is grossly unfair to Dual Tech Operators

The The Empowered Group of Ministers on telecom had asked Department of Telecommunications to take recommendation of TRAI on base price of all three set of spectrum band, including CDMA. Following decision of the EGoM and then by inter ministerial panel Telecom Commission, DoT approached TRAI three times but the regulator did not recommend base price for CDMA spectrum.

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Apart from this, the EGoM is likely to firm up its decision on the much-awaited Mergers and Acquisitions (M&A) policy that is expected to pave way for consolidation in the sector with 10 mobile service providers.

But As per the DoT proposal, the scenario for M&A is as follows.

a) GSM Operator acquires GSM Operator = Payment for One Block of Spectrum at Market Price minus Entry Fee Paid
b) GSM Operator acquires Dual Tech Operator = Payment for TWO Blocks of Spectrum at Market Price minus Entry Fee Paid
c) Dual Tech Operator acquires GSM Operator = Payment for One Block of Spectrum at Market Price minus Entry Fee Paid

As per the Comments of Planning Commission  (in the table 1 below), the cost of merger for Dual Tech Operators increases, since in all scenarios , the Planning Commission has proposed that only one Block of Spectrum against Entry Fees paid should be allowed, despite the fact that Entry Fee has been paid TWICE by Dual Tech Operators, once each for each Technology.

The proposal of the Planning Commission is grossly unfair to Dual Tech Operators, this can be seen financially from the scenarios below: