TRAI issued recommendations that tagged 2G Spectrum Price with that of 3G. However, the recommendations are not likely to be accepted in its current form. Industry Analysts met DoT and TRAI officials and here is the takeaway from the meeting.

De-linking of 2G Spectrum price from 3G Auction Price: Incumbent operators have raised objections on linking the 2G spectrum fee to 3G spectrum auction price, TRAI would evaluate other criteria to price 2G spectrum independently.

Potential re-evaluation of spectrum fee payment on licence renewal: TRAI has recommended that on license renewal, operators will have to return spectrum allotted in the 900MHz band and would be allotted spectrum in the 1800MHz band and pay fees on the entire allotted spectrum. For e.g., in Delhi, Bharti has been allotted 8MHz spectrum in the 900MHz band and 2MHz in the 1800MHz band. So, as per current TRAI recommendation, on licence renewal Bharti will be allotted 10MHz in the 1800MHz band and will have to pay for the entire 10MHz spectrum. In our view, this norm could be relaxed and spectrum up to, say 6.2MHz (the contracted amount), will be allotted without any fee and only the quantity above the contracted amount will be charged.

3 Year Lock-In – DoT will likely evaluate every recommendation made by TRAI separately and implement them in a phased manner. We believe, the recommendation prescribing removal of the three-year lock in clause for new operators for facilitating M&A in the sector will likely be implemented.

Mobile Number Portability may get another extension and is likely to to be implemented before September 2010. Finally, TRAI has proposed to initiate a consultation process to bring VAS providers under the licencing regime. We believe TRAI will strengthen
regulation of the VAS value chain (possibly in terms of revenue share agreements between VAS providers and operators).