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India – Telecom & Media Snapshots.

29 April, 2014

 

Legal News & Analysis – Asia Pacific – India – TMT 

 

  • The Department of Telecommunications (‘DoT’) has, on February 20, 2014, issued certain guidelines to govern the transfer of telecom service licenses/ authorisations subsequent to any amalgamation, merger, arrangement etc. between companies (‘Merger Guidelines’). In a situation where, by way of a Scheme, the licenses/ authorisations are transferred to the resultant entity, such resultant entity becomes eligible to acquire such licenses/ authorisations as per the Merger Guidelines. The Merger Guidelines permit the merger of an ISP license/ authorisation with Access Services license/ authorisation.

 

Key provisions of the Merger Guidelines, as issued by the DoT, are provided hereunder:

 

i. Notice is to be provided to DoT of any Scheme filed before the National Company Law Tribunal (‘Tribunal’) or the High Court and the DoT is required to raise objections or representations within 30 days of receiving such notice and upon receipt of approval of such Schemes, the transfer/ merger of the various licenses must be completed within one year from the date of approval.


ii. Lock-in conditions pursuant to auctions will apply to any new shares issued of an entity formed as a result of a Scheme.


iii. Subsequent to a merger or amalgamation, the license/ authorisations will be subsumed in the resultant entity. Further, the date of the validity of the various licenses/ authorisations will be correspond to the longer of the periods given in the licenses of the respective amalgamating entities. However, the validity period of the spectrum will remain unchanged.


iv. In case of a merger or amalgamation where the market share of the resultant entity exceeds 50%, such resultant entity must reduce its market share to below 50% within one year from the date of approval of the Scheme. Also, as a result of a merger, the total spectrum held by the relevant entity exceeds the prescribed limits, such excess spectrum must be surrendered within one year of grant of approval.


v. The Merger Guidelines set out provisions regarding the Spectrum Usage Charges and spectrum pricing.


Also, all demands relating to the licenses of the merging entities, if any, will have to be satisfied by either of the two entities before any approval for merger, transfer of license/ authorisation is given. However, any demands of either entity (other than one time spectrum charges), which has been stayed by a court of law will be subject to the decision of such litigation.

 

  • Telecom Regulatory Authority of India (‘TRAI’) has on February 10, 2014 notified amendments to the existing regulatory framework with regard to distribution of TV channels from broadcasters to Distribution Platform Operators (‘DPOs’) viz. cable, direct-to-home (‘DTH’), HITS and IPTV operators. One of the major reasons for bringing in these amendments is that aggregators (who are authorised agents of more than one broadcaster) bundle popular channels of the multiple broadcasters they represent and tend to piggy-back less popular channels in such bouquets to boost their viewership with the intention of increasing advertisement and subscriptions (for aggregator-owned broadcasters and commissions). Further, in both cases, the benefits accrue to aggregators at the cost of “unwanted” channels being pushed to DPOs and ultimately to the consumers. The Ministry of Information and Broadcasting (‘MIB’) had also sent a reference to TRAI in this regard, requesting for review of the regulatory framework with regard to the aggregators. These amendments will also contribute to the orderly growth and overall development of the sector by streamlining the distribution of TV channels from broadcasters to DPOs. TRAI has inter alia made the following amendments:

 

i. the definition of a broadcaster has been amended to clarify that prior to commencing of services as a broadcaster, an entity is required to obtain the necessary permission from the GoI in its name. This has been done in order to bring out the distinction;


ii. the definition of Multi System Operators (‘MSOs’) has also been amended to clarify the facilitative role of an authorised agent in the business of TV channel distribution both for the broadcasters and MSOs;


iii. only the broadcaster has been permitted to publish the Reference Interconnect Offers (‘RIOs’) and enter into interconnection agreements with DPOs. However, in case a broadcaster, in discharge of its regulatory obligations, is using the services of an agent, such authorised agent can only act in the name of and on behalf of the broadcaster;


iv. the broadcaster must ensure that its authorised agent, while providing channels/bouquets to the DPOs, does not alter the bouquets as offered in the RIO of the broadcaster; and


v. in case an agent acts as an authorised agent of multiple broadcasters, the individual broadcasters must ensure that such agent does not bundle its channels or bouquets with that of other broadcasters. However, broadcaster companies belonging to the same group can bundle their channels. To give effect to these amendments, a time frame of six months has been prescribed for the broadcasters to amend their RIOs, enter into new interconnection agreements and file the amended RIOs and the interconnection agreements with TRAI.

 

  • MIB has on January 16, 2014 passed an order regarding guidelines for television rating agencies (‘Order’). The Policy Guidelines for Television Rating Agencies in India (‘TRP Guidelines’) have been issued by the MIB upon approval by the Cabinet on January 9, 2014. The TRP Guidelines will be applicable to all rating agencies providing television rating services in India and will come into effect thirty days from the date of issuance of the Order.

 

  • TRAI has on March 31, 2014 notified the Telecommunication (Broadcasting and Cable) Services (Second) Tariff (Eleventh Amendment) Order, 2014 (‘Order’). Pursuant to the Order, TRAI has revised the tariff ceilings (applicable at the wholesale and retail levels) and allowed an inflation linked hike in two stages – (i) a hike of 15%, which has became effective from April 01, 2014; and (ii) a hike of 12.5% to come into effect from January 1, 2015 by way of a subsequent notification.

 

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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