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Telecom panel for higher limit on spectrum holding for mobile operators

The move will help telcos, including Reliance Jio, Vodafone, and Idea Cellular

Kiran Rathee  |  New Delhi 

Telecom panel for higher limit on spectrum holding for mobile operators

In a move that will boost consolidation and help stressed exit the sector, the (TC) has approved the recommendations of the Telecom Regulatory Authority of India (Trai) on relaxing spectrum-holding caps for mobile operators.

The move will help telcos, including Reliance Jio, Vodafone, and

Sectoral regulator in November last year had proposed raising the 25 per cent overall spectrum-holding limit to 35 per cent and also removing the cap of 50 per cent holding in the same band.

In place of it, the regulator had recommended having a cap of 50 per cent on the combined holding in the sub-1 gigahertz (GHz) bands (700, 800, and 900 megahertz, or MHz).

The TC, which is the highest decision-making body in the Department of Telecommunications (DoT), has approved the recommendations of Trai, and this will help the stressed telcos to exit and also provide an opportunity to bigger players to have more in their kitty.

“There were five-six items considered by the TC and it has concurred with Trai’s recommendations, which basically recommended increasing the overall cap from 25 to 35 per cent and a cap of 50 per cent on the sub-1 GHz (700 MHz, 800 MHz, and 900 MHz),” a top source in the DoT said.

The relaxation was part of the proposals of an inter-ministerial group (IMG), formed in June last year to address the stress in the The IMG had recommended increasing the tenure of paying for to 16 years and shift from the prime lending rate to the marginal cost of funds-based lending rate. On the issue of caps, the IMG had asked the DoT to take the opinion of

The TC had earlier approved the IMG recommendations on the payment tenure and the interest rate shift. Now with the approval of the cap matter too, the issues will be sent to the Cabinet for approval.

Reacting to the TC decision, Cellular Operators Association of India Director General Rajan Mathews said, “We welcome the decision of the TC to increase the overall cap as it will facilitate mergers and acquisitions in the sector.”

The relaxation in the 50 per cent cap will let retain most of the airwaves in the 800 MHz band after the acquisition of Reliance Communications’ assets. Also, and will be able to retain most of their airwaves after their merger.

According to people in the DoT, surrendering was not a viable or preferred option for telecom operators in the case of mergers and acquisitions but with the relaxation of cap rules, consolidation will pick up.

A win-win for all

— Vodafone, can retain all their airwaves after merger

will benefit, to get more in 800 MHz from Reliance Communications (RCom)

— RCom can sell or trade the remaining it has in 800 MHz

— Airtel can also increase its overall holding

— Aircel can explore options to trade or sell its airwaves

"For consolidation to happen, the relaxation is essential because the other option of surrendering was not recommended by the IMG, whereas this is a realistic proposition,” the source added.

Market leader Bharti Airtel had supported increasing the cap to 33 per cent while advocating retaining the 50 per cent limit whereas was in favour of retaining the 25 per cent cap and removing the 50 per cent limit. Others, including and Idea Cellular, had supported removing the concept of capping because was bought through auctions, and operators could deploy any technology on a band.

The other proposals approved include the network for project (NFS) for the defence forces. The outlay for the project has now been enhanced to around Rs 247 billion from Rs 113 billion earlier. State-run BSNL is the implementing agency for the project.

The NFS project approval will go to Cabinet for the final nod. Other proposals approved include the issuance of Category B licence for virtual network operators. The Category B licence will be limited to wireline services.

The TC also approved setting up WiFi hotspots in gram panchayats in Uttar Pradesh, Himachal Pradesh, and Rajasthan, and providing connectivity in the Northeast through satellite and connecting the Andaman and Nicobar Islands.

First Published: Wed, January 10 2018. 01:56 IST