Cabinet approves mobile airwaves trading in connectivity boost

NEW DELHI/MUMBAI (Reuters) - India on Wednesday allowed telecom carriers to trade unused mobile airwaves, a move aimed at improving services in the world's second-biggest market by number of mobile customers.

Spectrum sharing guidelines were issued by the government in August, but leasing was not allowed.

On Wednesday, telecoms minister Ravi Shankar Prasad said buying and selling of unused airwaves would be allowed for all spectrums and companies would not need government approval for these transactions.

However, if sample checks show that "the undertaking is wrong then action will be taken, including the cancellation of the trading agreement," he said at a press conference.

The move will make it easier for companies like Bharti Airtel and Vodafone India to meet surging demand in the country's phone and data usage.

India's increasingly congested airwaves have resulted in problems like calls getting cut in the middle of conversations and connectivity issues, even as more and more users hook on to the Internet from their phones and tablets.

The number of smartphone users in India stood at around 140 million in 2014. It is expected to reach 651 million by 2019, according to a study by Cisco.

Sharing and trading of spectrum allows carriers that have the necessary airwaves but were unable to build a big consumer base, sell to those running short, the minister said.

Trading will also allow telecom operators to access each other's resources without having to deal with expensive and time-taking merger and acquisitions.

Shares of the country's top telecom carrier Bharti Airtel were up 2.4 percent at 356.25 rupees on Wednesday afternoon. Shares in Reliance Communications Ltd, India's fourth-biggest mobile phone carrier, were up 12 percent on the news.

(Reporting by Nivedita Bhattacharjee and Malini Menon; Editing by Sunil Nair and Gopakumar Warrier)