Idea, Spice, RCom may benefit most from tighter Trai norms

Idea, Spice, RCom may benefit most from tighter Trai norms
Comment E-mail Print Share
First Published: Sat, Sep 01 2007. 12 09 AM IST
Updated: Sat, Sep 01 2007. 12 09 AM IST
Based on a review of the seniority of those waiting in line for GSM spectrum, it appears that wireless operators Idea Cellular Ltd, Spice Communications Ltd and Reliance Communications Ltd (RCom) are set to be the biggest beneficiaries of any tightening of the spectrum allocation criteria, as suggested by the Telecom Regulatory Authority of India, or Trai.
Spice will be the biggest beneficiary while Idea Cellular will get to complete its national footprint and RCom will be able to finally enter the GSM business through companies in which it has investments.
This is based on Mint’s examination of the seniority levels of current applicants for GSM spectrum. Which company will benefit the most depends on the degree to which the existing criteria for allocation will be tightened and how incremental spectrum will be allocated to existing players.
A high degree of tightening, such as the twofold to sixfold hike in the subscriber-base criteria suggested by Trai, will help all three, while a lower degree of tightening in the subscriber criteria will help only Idea and Spice.
Idea Cellular already has, or been committed, spectrum in 13 out of the 22 licence areas and needs it in nine more, while Spice has it in two circles and needs it in 20 more. RCom has it in eight circles and needs it in 16 more.
The licence applications of all three companies have been put on hold due to the lack of visibility on spectrum, despite 20MHz of extra spectrum being expected to be released by the defence services soon.
Each new player requires a start-up spectrum of at least 4.4MHz. Though the 20MHz would have accommodated four new players in each circle, more than half of it will have to be given to the existing players in those areas due to the current policy of doling out incremental spectrum as the number of subscribers with an operator increases.
The three applicants, who had given up all hope of getting a share of the additional spectrum being released by the defence forces, are now expecting the new allocation criteria to help them gain access to this vital resource, subject to the department of telecommunications (DoT) approval.
“It is only natural that new entrants like us also be given a chance,” pointed out the head for corporate affairs with one of the hopeful companies. “It is time that the industry also realized that the best way to do this would be for spectrum to be allocated through auctions,” he said, differing from the stand that the GSM operators’ association had taken.
Going by the formula of first come, first served, if DoT allocates one more licence in each of the 22 circles, Spice Communications will get 13 of them, followed by Idea Cellular with six and Tata Teleservices with the remaining three.
However, if DoT decides to go for one more round of pan-India allocation, Swan Telecom Pvt. Ltd and Cheetah Corporate Services, both linked to the Reliance-Anil Dhirubhai Ambani Group’s RCom, will benefit the most.
Out of the 22 second-round licences, the two RCom-linked companies, which had applied for licences in March, will get about 12 of them, while Spice, which applied for licences in August, will get four more and Idea Cellular will account for the remaining three licences.
The two-circle CDMA operator Himachal Futuristic Communications Ltd (HFCL), which also put in its licence applications in May this year, will get the remaining three licences. In case the government decides to allot one more, or three new licences per circle, HFCL will get another 14 circles.
Comment E-mail Print Share
First Published: Sat, Sep 01 2007. 12 09 AM IST
More Topics: Idea | Spice | RCom | Trai | Home |