DoT approaches Trai on review of spectrum caps for telecom companies
ET Bureau|
Updated: Oct 05, 2017, 01.06 AM IST
KOLKATA: Incumbent telcos are divided on the review of spectrum cap rules, with Vodafone India, Idea Cellular and Reliance Communications (RCom) pushing for the removal of caps, while market leader Bharti Airtel has resisted the idea, according to a telecom department (DoT) letter to the sector regulator.
In its letter to the Telecom Regulatory Authority of India (Trai), DoT said, “Idea, Vodafone and RCom have requested removal of spectrum caps while Bharti Airtel has represented against it,” attributing the same to a report of the inter-ministerial group (IMG) that is examining stress levels in the telecom industry. The DoT has sought the regulator’s views on whether present spectrum cap rules require a review, following the IMG’s suggestions to have the matter examined amid mounting financial stress in the sector.
India’s telecom M&A rules, at present, require a merged entity to hold up to 25% of total assigned spectrum and up to 50% in a specific band in a service area. The rules also entail a merged entity’s combined customer market share and revenue market share (RMS) in a service area does not exceed 50%. Any easing of spectrum limits within a band by the Telecom Regulatory Authority of India (Trai) will automatically bring relief to Idea and Vodafone which are in the process of merging.
More so, since under current rules, the combined entity could reportedly breach spectrum caps in the 900 MHz band in 5 telecom circles (Maharashtra, Gujarat, Kerala, Haryana and UP West) and two in the 2500 MHz (Maharashtra and Gujarat), according to analysts. Industry experts said it also made sense for RCom to back removal of spectrum caps, especially if it were to trade its 4G airwaves in the 800 MHz band in future with someone like new entrant Reliance Jio, who would then not be shackled by the 50% band cap rule. To be sure, while RCom has said it is looking to trade its airwaves, Jio hasn’t said it is keen on buying it.
On the contrary, Airtel’s resistance, they said, presumably stems from fact that the proposed spectrum cap review is akin to changing the rules of the game midway. “Had this happened earlier, Airtel could possibly have changed its bidding strategy altogether and gone for more airwaves in certain circles,” said an industry executive, who did not wish to be named.
In its letter, the DoT has asked Trai to provide views on whether existing applicable band-wise spectrum cap of 50 % of total spectrum assigned in a band for a licensed service area (LSA), and overall cap of 25 % of total spectrum assigned in LSA across bands, should continue or needs review.
In its letter to the Telecom Regulatory Authority of India (Trai), DoT said, “Idea, Vodafone and RCom have requested removal of spectrum caps while Bharti Airtel has represented against it,” attributing the same to a report of the inter-ministerial group (IMG) that is examining stress levels in the telecom industry. The DoT has sought the regulator’s views on whether present spectrum cap rules require a review, following the IMG’s suggestions to have the matter examined amid mounting financial stress in the sector.
India’s telecom M&A rules, at present, require a merged entity to hold up to 25% of total assigned spectrum and up to 50% in a specific band in a service area. The rules also entail a merged entity’s combined customer market share and revenue market share (RMS) in a service area does not exceed 50%. Any easing of spectrum limits within a band by the Telecom Regulatory Authority of India (Trai) will automatically bring relief to Idea and Vodafone which are in the process of merging.
More so, since under current rules, the combined entity could reportedly breach spectrum caps in the 900 MHz band in 5 telecom circles (Maharashtra, Gujarat, Kerala, Haryana and UP West) and two in the 2500 MHz (Maharashtra and Gujarat), according to analysts. Industry experts said it also made sense for RCom to back removal of spectrum caps, especially if it were to trade its 4G airwaves in the 800 MHz band in future with someone like new entrant Reliance Jio, who would then not be shackled by the 50% band cap rule. To be sure, while RCom has said it is looking to trade its airwaves, Jio hasn’t said it is keen on buying it.
On the contrary, Airtel’s resistance, they said, presumably stems from fact that the proposed spectrum cap review is akin to changing the rules of the game midway. “Had this happened earlier, Airtel could possibly have changed its bidding strategy altogether and gone for more airwaves in certain circles,” said an industry executive, who did not wish to be named.
In its letter, the DoT has asked Trai to provide views on whether existing applicable band-wise spectrum cap of 50 % of total spectrum assigned in a band for a licensed service area (LSA), and overall cap of 25 % of total spectrum assigned in LSA across bands, should continue or needs review.
