The empowered group of ministers (EGoM) on telecom, headed by Finance Minister P Chidambaram, on Wednesday approved the participation of 100 per cent foreign owned telecom entities in the 2G spectrum auction scheduled for November.
Foreign players, who win spectrum in the auction, will be allocated licence and spectrum only after they divest 26 per cent stake to an Indian partner. That's because telecom companies can only have 74 per cent foreign direct investment as per law.
The decision will help players like Telenor, which has severed its ties with Unitech in their joint venture Uninor. Uninor’s license was cancelled by the Supreme Court.
However, the EGoM has postponed a decision on the issue of one-time fee on spectrum held by existing telecom operators to October 8.
Following the Supreme Court's opinion on the Presidential Reference, the government is now free to take a decision in this regard.
The Department of Telecommunications had made four proposals to the Cabinet on one-time fee -- no charge; levy a one-time fee on all airwaves held by existing telecom companies; impose a fee on airwaves held beyond the start-up spectrum of 4.4 MHz; or levy a fee on airwaves held beyond the contracted spectrum of 6.2 MHz.
According to a top DoT official, the department added the option of one-time auction-determined price for all spectrum held by the operators to create a level-playing field between new entrants and existing players.
Existing players were allocated pan-India permits with 4.4 Mhz of airwaves frequencies at price of Rs. 1,658 crore but new telecom operators will have to pay a minimum of Rs. 14,000 crore for similar set of airwaves for pan-India business in auction that are scheduled to start in November.
(With inputs from PTI)
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