Data boom to drive spectrum demand: ICRA

Bharti Airtel has led the way in such transactions, says the ratings agency

Data services are going to drive growth of telecom companies in times to come, as data usage per subscriber and incremental data consumers are growing at a fast clip. Ratings agency ICRA expects this growth to continue, which would lead to higher demand for data spectrum. Accordingly, there has been spectrum trading/sharing as well as merger transactions, which have been announced in the last few months.

Bharti Airtel Limited has led the way in such transactions. The company has completed two transactions to acquire spectrum in 1,800 MHz band (from Videocon Telecommunications) and in 2,300 MHz band (from Aircel). These are in continuation to the transactions undertaken by the company to bolster its 4G spectrum holding, making it the only company apart from RJio to have pan-India 4G spectrum. The other telecom operator who has been active in such transactions is Reliance Communications with two completed transaction and one proposed transaction.

According to Sabyasachi Majumdar, Senior vice president and co-head corporate sector ratings, ICRA: "Spectrum trading/sharing and business mergers allow the spectrum holding of the telcos to get better aligned to its utilisation, thereby leading to greater efficiency. Moreover, spectrum trading allows smaller telecom companies to monetize their underutilised spectrum holdings, while it provides opportunity to larger telecom companies to amass spectrum outside the auctions. The latest transactions clearly indicate the need for spectrum with data capabilities amid intensifying competition."