Trai Proposes Easing Spectrum Holding Norms; May Help Vodafone-Idea Merger, RCom

In a bid to encourage mergers and acquisitions as well as spectrum trading in India’s telecom market, the Telecom Regulatory Authority of India has suggested removing caps on spectrum holding in the individual band. In its response to the report on ‘Issues Relating to Spectrum Cap’, the regulator has recommended the existing limit to hold up to 50% by an operator of the total spectrum available within a band in a zone should be removed.

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“The current intra-band cap should be removed. Instead, there should be a cap of 50% on the combined spectrum holding in the sub-1 GHz bands,” Trai said in a statement. The regulator has also suggested raising the limit for overall holding across all bands to 35% from 25%, which may encourage consolidation as well as participation in spectrum auctions, effectively increasing Indian government’s revenue.

The regulator has also suggested that the combined spectrum holding limit be set at 50% for sub-1 GigaHertz bands that are 700 Mhz, 800 Mhz, 900 MHz bands. These bands are known for their optimal coverage. It argued that imposing a cap on the sub-1GHz band was important as these are most optimal bands. “Therefore, spectrum in sub-1GHz range viz 700 MHz, 800 MHz and 900 MHz should be treated separately, and special provisions have to be made to safeguard against the creation of a monopoly,” Trai said.

Analysts reckon that these recommendations, if accepted by the Department of Telecom (DoT), would help the proposed Vodafone-Idea Cellular merged entity, besides facilitating the acquisition of spectrum of Reliance Communications. Reliance Jio has already shown interest in RCom’s spectrum.