In a move that will boost mergers and acquisitions, telecom regulator Trai on Tuesday recommended doing away with caps on spectrum holding in individual bands, and also mooted relaxing the overall ceiling. The Telecom Regulatory Authority of India (Trai), in its recommendation to the Government, said the current limit allowing an operator to hold up to 50 per cent of the total spectrum available within a band in a zone should be removed.
It has also suggested raising the limit for overall holding across all bands to 35 per cent from 25 per cent. For sub-1 GigaHertz bands (that is 700 Mhz, 800 Mhz, 900 MHz bands known for their optimal coverage), it suggested that the combined spectrum holding limit be set at 50 per cent. The recommendations, if accepted by the telecom department, would provide a major relief for the soon-to -be-merged Idea Cellular and Vodafone which are teaming up to create India’s biggest mobile phone operator ahead of current market leader Bharti Airtel.
It would also facilitate acquisition of spectrum of Reliance Communications (which has announced shutting down of 2G and 3G services) by suitors like Reliance Jio. These deals have been hindered by the present caps on spectrum holding.
“Mergers and acquisition guidelines allow holding 50 per cent of market share in terms of subscriber base as well as revenue. Therefore, 25 per cent cap on overall spectrum holding may put constraints on the ongoing consolidation phase,” Trai said in its 25-page recommendation to the Government.