Regulator Wants Spectrum Cap Raised To Spur Telecom Deals
TRAI suggests to increase spectrum limits to spur consolidation.
India’s telecom regulator suggested a higher cap on spectrum holdings of telecom operators to encourage mergers and acquisitions at a time when carriers are looking to pare debt by selling assets.
The total spectrum an operator or a service provider can hold in various bands should be raised to 35 percent of the airwaves across all bands, the Telecom Regulatory Authority of India said in a statement on its website. Currently, the cap for an individual band is 50 percent while the overall limit is 25 percent across all frequencies.
The telecom sector, with an estimated debt of Rs 4.5 lakh crore, is in a consolidation phase. More so since last year’s entry of Reliance Jio Infocomm, which upended the market with its free voice and initially free and now ultra-cheap data.
M&A guidelines for the sector allow holding up to 50 percent of the subscriber and revenue market share. Hence “a 25 percent cap on overall spectrum holding may put constraints on the ongoing consolidation phase”, TRAI said.
The regulator suggested that the individual band limit of 50 percent be done away with altogether. “Instead, there should be a cap of 50 percent on the combined spectrum holding in the sub-1 GHz bands of 700 MHz, 800 MHz and 900 MHz bands,” it added.
TRAI’s recommendations came after a letter by the Department of Telecom seeking its views on an Inter-Ministerial Group’s proposal to relax the spectrum cap as it will provide an exit route to loss-making mobile service providers. The suggestions will be taken up by the Telecom Commission, which is considering IMG’s proposals to ease the financial stress of the heavily indebted sector.
The commission is likely to meet in December. Once it approves the suggestions, they will be forwarded to the Union Cabinet for final approval.