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India – Telecom & Media September Review

24 October, 2013

 

Legal News & Analysis – Asia Pacific – India – TMT 

 

  • Keeping in mind the National Telecom Policy 2012, the Department of Telecommunications (‘DoT’) under the Ministry of Communications and Information Technology has introduced the concept of a Unified License (‘UL’). On August 19, 2013, DoT released certain guidelines, which will govern the grant of the UL. With the introduction of the UL, licenses for telecom service providers will be delinked from the previous ‘spectrum’ license regime. While a company can hold only one license, it can get permits for multiple services, including access, internet, national long distance, international long distance etc.

Following are some of the key guidelines released by DoT:


i. The UL will be for a period of 20 years, irrespective of the validity period of the license already held. There is an option of renewal for a further period of 10 years if the application is made during the 19th year.


ii. Guidelines specify that the licensee “shall not hold any other license for the services covered under the scope of Unified License. In case the Licensee obtains any other License by way of acquisition or merger, the License so obtained shall have to be migrated and merged to the aforesaid Unified License as per prescribed procedure”. Accordingly, no telecom operator can hold any stake in a rival operator in the same telecom circle. As of now, an operator can hold up to 9.99% stake in a competitor in the same circle.


iii. Telecom operators will have to pay INR 150 million as non-refundable entry fee, as well as an annual license fee as a percentage of Adjusted Gross Revenue (‘AGR’) for the relevant service-area. The license fee will be 8% of the AGR, an increment to the current 5%.


iv. Licensees should ensure that foreign equity in the company does not exceed 74% during the entire license period. FDI of up to 49% will be allowed under the automatic route, and up to 74% through prior approval of FIPB.


v. Licensees should have a minimum paid-up capital and a combined minimum net worth of at least INR 250 million.

 

  • Pursuant to a request dated July 12, 2013 from the Ministry of Information and Broadcasting, the Telecom Regulatory Authority of India (‘TRAI’) on July 30, 2013, issued a consultation paper on issues relating to FDI in the broadcasting sector (‘FDI Consultation Paper’). The FDI Consultation Paper was issued to obtain views from stakeholders for liberalising the existing limits of foreign investment in the broadcasting sector. Stakeholders were invited to provide their views on the FDI Consultation Paper by August 12, 2013. Pursuant to the comments received by the stakeholders, TRAI has on August 22, 2013 released recommendations, including inter alia:

i. enhancement of the FDI limit for the broadcast carriage services to 100% from the existing limit of 74%;


ii. status quo to be maintained regarding FDI limits (100% through the approval route) for uplinking of “non-news and current affairs” TV channels and downlinking of TV channels;


iii. for uplinking of “news & current affairs” TV channels and FM radio services, it is proposed to enhance the FDI limit to 49% from the existing limit of 26%; and


iv. streamlining of the FIPB approval process and making it time bound.


v. The proposed limits are yet to be approved by DIPP.

 

  • Pursuant to a request from the Ministry of Information and Broadcasting (‘MIB’), TRAI, on April 17, 2013, issued a consultation paper on Guidelines/Accreditation Mechanism for Television Rating (‘TRP’) Agencies in India (‘TRP Consultation Paper’) to obtain views on the issues relating to the same. Stakeholders were invited to provide their views on the TRP Consultation Paper by May 9, 2013. Pursuant to the comments received by stakeholders, TRAI has, inter alia, issued certain recommendations on September 11, 2013, and the proposed guidelines are to be notified by MIB within a period of two months.

 

 

AZB

 

For further information, please contact:

 

Zia Mody, AZB & Partners
zia.mody@azbpartners.com

 

Abhijit Joshi, AZB & Partners 
abhijit.joshi@azbpartners.com


Shuva Mandal, AZB & Partners 
shuva.mandal@azbpartners.com

 

Samir Gandhi, AZB & Partners
samir.gandhi@azbpartners.com


Percy Billimoria, AZB & Partners 
percy.billimoria@azbpartners.com

 

Aditya Bhat, AZB & Partners 
aditya.bhat@azbpartners.com

 

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