The Empowered Group of Ministers (EGoM), on Thursday, allowed the existing players to retain a maximum of 2.5 MHz in prime band spectrum when their current licences expired, provided they paid a price which would be determined later through auction.

The EGoM also decided that companies would have to pay a market price if they merged or acquired another company which was allocated spectrum at the old price of Rs.1,658 crore.

“Telecom companies will be allowed to retain 2.5 Mhz of spectrum in 900 Mhz band but they will have to pay market-determined price decided through auction. The auction for 900 Mhz band will be conducted 18 months in advance from the date the licence of telecom companies expires,” sources said.

The Telecom Regulatory Authority of India (TRAI) has recommended that the existing operators give up all their spectrum holdings in prime 900 Mhz band when their permits come up for renewal starting November, 2014. The government has, in-principle, approved the TRAI recommendations.

Telecom Minister Kapil Sibal, after the EGoM meeting, said, “EGoM has decided on what needs to be done for all those who have 5 MHz spectrum.”

The EGoM, headed by Finance Minister P. Chidambaram, took the decision based on the recommendations of the Department of Telecommunications.

The Telecom Commission had earlier recommended that the existing operators give up all airwaves in 900 MHz. On mergers and acquisitions, the EGoM decided that companies would have to pay the market price if they acquired spectrum from another company which was allocated spectrum at the old price.

“... in the context of mergers and acquisitions, what is the price that would have to be paid if the acquiring company has to acquire spectrum given to a company at an administered price, which is Rs.1,658 crore, that is one decision that has been taken,” Mr. Sibal said.

Sources said the decision was taken to create a level-playing field for companies that were participating in auction to buy pan-India spectrum at a minimum price of Rs.14,000 crore and those who wanted to take the acquisition route to acquire spectrum.

Without disclosing details, Mr. Sibal said the decision taken by EGoM on mergers and acquisitions would be placed before the Cabinet for approval.

“Hopefully, the Cabinet will meet on November 8. The decision taken on Thursday, except on re-farming, and those that are decided by EGoM will be placed before the Cabinet,” Mr. Sibal said.

The decision on re-farming gave partial relief to incumbent players.

Citing a report by Analysys Mason on TRAI’s recommendations on spectrum re-farming, COAI said it would lead to increase in tariffs, and loss of connectivity, thereby, affecting both consumers and the industry severely

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