Telecom Spectrum Cap to Increase After TRAI’s Recommendations

The Telecom Commission on Tuesday relaxed the cap on spectrum holdings of telecom operators in line with the telecom regulator’s recommendations. The move will encourage mergers and acquisitions at a time when carriers are looking to pare debt by selling assets.

The commission approved Telecom Regulatory Authority of India’s recommendation to raise the overall spectrum holding cap in a particular circle to 35 percent from 25 percent earlier, a senior government official told BloombergQuint.

The regulator had also 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.

TRAI

The Telecom Commission’s approval will benefit the Vodafone-Idea Cellular merger as the combined entity would breach the 50 percent cap in five circles according to current merger and acquisition guidelines. Presently, a combined entity cannot hold more than 50 percent of the spectrum in each band individually and should have less than 25 percent of the airwaves allocated to all operators across bands and circles.

The commission had earlier approved an inter-ministerial group’s suggestion to increase the period of deferred spectrum liability payment to 16 years from 10, allowing operators a longer tenure to repay spectrum costs. 

It had also allowed a switch from the prime lending rate to the marginal cost of funds based lending rate plus 4 percent, which could help save interest costs.

All these recommendations will now go to the Cabinet for its approval, the government official quoted above said.

In its September meet the commission had sought views on an inter-ministerial group’s proposal for easier spectrum holding norms, as it would provide an exit path to loss-making mobile service providers and ease the consolidation in the sector.

(This article was originally published in BloombergQuint)