Telecom Commission favours raising spectrum holding limit
New Delhi: The Telecom Commission on Tuesday accepted recommendations by the industry regulator to ease current spectrum holding caps, smoothening the way for consolidation triggered by Reliance Jio Infocomm Ltd’s September 2016 launch.
The commission, the highest decision-making body at the department of telecommunications, approved raising the overall spectrum cap per operator in a telecom circle, or zone, to 35% from the current limit of 25%.
It suggested scrapping the current intra-band cap on operators that limited them to hold only up to 50% spectrum in a single band in a circle, said a person present at a meeting of the commission on condition of anonymity.
The commission also accepted the Telecom Regulatory Authority of India’s suggestion to set a cap of 50% on the combined spectrum holding in the sub-l GHz bands (700MHz, 800MHz and 900MHz bands) in a circle, the person said.
Under current provisions, an operator can hold up to 25% of the total spectrum assigned across all bands in a circle and 50% of total spectrum within a given band in a circle. The country is divided into 23 telecom circles.
The proposals need to be approved by the cabinet. If they receive cabinet approval, Vodafone India Ltd and Idea Cellular Ltd, which propose to merge, will not have to surrender spectrum in seven circles where they would have breached the caps as a combined entity.
This would also mean Mukesh Ambani’s Jio could look to buy the rest of the spectrum owned by his brother Anil Ambani’s Reliance Communications Ltd (RCom), especially in the coveted 800MHz band.
Under current spectrum holding norms, if Jio were to buy all of RCom’s spectrum in the 800MHz band, it would breach caps across 11 out of the 23 telecom circles. The hurdles faced by Vodafone-Idea and Jio would be cleared if the proposals are accepted by the cabinet.
“This would ease the merger process for Vodafone and Idea and also make it easier for Reliance Jio to acquire spectrum from Reliance Communications in the sub-1 GHz band. The possibility of additional spectrum offers an opportunity for operators to improve service quality,” said Mahesh Uppal, director of the communications consulting firm ComFirst.
A slew of telecom mergers and acquisitions, including the planned union of Vodafone and Idea, have followed the entry of Jio with free voice and data services that disrupted the industry. RCom plans to sell its wireless business assets by the end of March. Bharti Airtel Ltd has acquired the Tata group’s wireless assets virtually for free.
Last month, Jio said it would buy a majority of the wireless assets of Reliance Communications, which include 122.4MHz of 4G spectrum in the 800/900/1,800/2,100MHz bands.
“Even after the Jio deal, RCom is left with almost 50MHz spectrum in the 800MHz band,” a person aware of the details said on condition of anonymity.
Whether other companies, including Airtel, will also look to buy the residual spectrum left with RCom remains to be seen. “RCom would have to come back to the players and tell us what spectrum is left in which circle; only then we can take a call depending on the feasibility,” said another person with direct knowledge of the matter.
While an increase in spectrum caps is good news, it will also mean that telcos may stay clear of any spectrum auctions in the future.
“With the kind of data consumption that we have seen, operators would need additional spectrum, but we do not see a spectrum auction happening in the next 9-12 months as the companies are still optimizing spectrum portfolio. We would want to see the consumption of data after penetrating into deeper pockets of India. Spectrum need will come after more and more people come to 4G as they will consume data and they would need higher speed,” said Rajan Mathews, director general at telecom lobby group Cellular Operator Association of India.
When contacted, Airtel, Idea Cellular and RCom declined to comment. A quey emailed to Jio was not answered.
“Vodafone welcomes Telecom Commission’s acceptance of TRAI’s recommendation for a higher cap on spectrum holdings... This will benefit customers, government and industry,” Vodafone said.
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