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Finance Ministry readying draft note to declare spectrum a tangible asset

Finance Ministry readying draft note to declare spectrum a tangible asset

By Press Trust of India | Updated: 24 April 2014 15:35 IST

The Finance Ministry is preparing a draft note on making spectrum a tangible asset so that the airwaves can be considered as collateral by financial institutions for lending to telecom companies. A decision on this matter, however, will most probably be taken by next government only.

"Inter-ministerial consultation process has been going on it. We are firming up a proposal. Most probably the next government will take the final call on it. It may be through EGoM or any other way in which they decide," a DoT official said.

The Finance Ministry has asked the Department of Telecom (DoT) to provide its inputs on modalities required to make airwaves a tangible asset so that lenders are able to realise value from the spectrum.

"DoT would devise a methodology for valuing spectrum, to reflect true realisable value of the spectrum for the purpose of treating it as security and also a robust methodology for finding market price," an official source said.

Telecom companies have expressed concerns on treatment of spectrum as intangible asset due to which banks don't accept it is as collateral to raise funds, sources added.

Telecom operators have been requesting the government to treat spectrum as part of harmonised list of infrastructure on the grounds that it is akin to optic fibre and other transmission networks.

In February, seven telecom companies- Bharti Airtel, Vodafone, Idea Cellular, Reliance Jio Infocomm, Uninor, Reliance Communications and Aircel- cumulatively purchased spectrum for about Rs. 62,162 crores.

Most of these companies have announced that they would make payment in installments. To address the problem of financing the spectrum cost, the government had allowed telecom companies to make 25-33 percent as upfront payment and rest of the payments in 10 yearly installments after 2 years of moratorium.

There is already a tri-partite agreement (TPA) signed between government, lenders and telecom operators for auctions that were held in November 2012 and March 2013.

Wireless Planning Commission, custodian of airwaves under DoT, had given its view that spectrum should be included in the TPA by amending telecom licences in consultation with Department of Legal Affairs and Department of Financial Services.

The WPC has said that financial institutions should be allowed to conduct auction on consultation with DoT.

Earlier this month, DoT and the Department of Economic Affairs (DEA) started examining if spectrum could be included in the harmonised list of infrastructure.

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