Thursday, July 03, 2014

MIB extends FM migration GOPA till March 31, 2015

The Ministry of Information & Broadcasting (MIB) has once again extended the deadline for signing the migration Grant of Permission Agreement (GOPA). The last date for signing the agreement has now been extended to March 31, 2015 from the earlier deadline of June 30, 2014, with licenses of existing FM players set to start expiring from April 1, 2015.
The migration GOPA is an operating agreement required to be signed by radio operators who want to migrate to Phase III of FM broadcast. The news has been met by mixed reactions from the radio industry. Though the extension of GOPA does not have a direct effect on the Phase III spectrum auctions, which are expected to be held by the end of the year, operators are worried that it will lead to further delays in accepting the Phase III auction formula suggested by TRAI and mostly supported by the industry. In February, TRAI had recommended a set of amendments, which included extending license period to 15 years, along with suggestions on migration fees and reserve price. A decision on these suggestions is yet to be taken by the Government. (TRAI releases Phase III recommendations, agrees with broadcasters on most points).
An industry source said that the Government should give clarity on the migration formula in advance in order to help operators to prepare for the upcoming auctions. 
Vineet Singh Hukmani, MD, Radio One expressed disappointment with the news and said, "The Government must announce the acceptance of TRAI formula within July, otherwise fund raising for Phase III will be seriously hampered. If Phase II players are worried about current business extension, how will they even think of Phase III expansion?".
Prashant Panday, MD & CEO, ENIL, which operates Radio Mirchi, felt that it is obvious the GOPA deadline has been extended. "In terms of sequence, the Government first has to accept TRAI's recommendations on renewal of Phase II licenses and then the migration GOPA has to be signed. Since the first step has not happened yet, it is obvious that the second step would get delayed."
According to Panday, it is, therefore, important for the Government to immediately complete the first step. "TRAI has made the recommendations in February 2014. TRAI has also clarified queries raised by MIB. It is now for the Minister to take the decision. We in the radio industry are very impressed with the new Minister and are confident he will take the decision quickly," he said.
Echoing Hukmani's assessment, he further added that if Phase II renewal decision is taken quickly, it will help Phase III auctions too, because players will be more sure about where their current businesses stand. "Without this surety, there is no way they can bid for Phase III. Since Phase III auctions are around the corner, it is important broadcasters feel secure about renewals," he said.
Other operators though are not reading too much into it. Said a senior official of an FM operator, "It is a positive step to ensure that operators do not get stuck." He, however, admitted that the Government has yet to accept TRAI's recommendations. "The Minister (Prashant Javadekar) has promised us that he will expedite the transition process and we have seen some development like starting the process for hiring of the e-auctioneer," he said.