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Merchant bankers may be kept out of phase II of FM radio

29-December-2004
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Merchant bankers may be kept out of phase II of FM radio

The government is still analysing the financial bids submitted by SBI Caps and PNB Gilts for the rollout of FM radio phase II.

While the bids were submitted more than a month ago, the government is yet to take a decision on appointing a banker. Internal discussions are taking place within the information and broadcasting ministry on the way forward on the second phase of FM radio privatisation, according to industry sources.

Cost feasibility of appointing a merchant banker is one of the issues being looked at by the government, it is learnt. In the first round of privatisation, merchant bankers were not involved at all.

Around 110 FM radio frequencies will be thrown open for bidding in the second round. At present, 22 private FM stations are operational in the country.

On the policy front, the government is yet to firm up a view. But, bidding is likely for one-time entry fee. As for annual charges, it may be a fixed fee model, rather than revenue-sharing. The annual fee will be quite low, an industry source pointed out.

The fiasco in the first phase of FM radio privatisation prompted the government to opt for the merchant banker route for the next round.

Once the government formulates its recommendations on FM-phase 2, the Union Cabinet will take a call on the issue.

The Telecom Regulatory Authority of India (Trai) had recently reiterated its recommendations on all key issues related to the second phase of private FM radio. The regulator defended its stand on revenue-sharing, method of payment of fees, migration modalities, ownership pattern, allowing news, and networking in FM radio.

Countering the information and broadcasting (I&B) ministry observations, Trai has pointed out that an annual licence fee at 4% of gross revenue is justified. The objective of recommending a licence share of 4% of gross revenue is to bring down the burden of the industry, according to Trai.

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