Centre issues spectrum trading norms to telcos

In a move that could ease the financial stress on some telecom service providers, Prime Minister Narendra Modi-led NDA government has allowed telcos to trade airwaves. This move of the government has also allowed others to add bandwidth and improve the quality of services in the world’s second largest telecom market. The government notification in this regard came in on Tuesday, more than a month after the Cabinet had cleared such rules.

Under the new rules, spectrum trading will be allowed between two telcos in all bands, but only two years after the airwaves have been assigned, won in an auction or received through a deal. An operator wanting to sell spectrum that was allocated by the government needs to convert it into tradable airwaves by paying a market price to the government.

A non-refundable transfer fee of one <g data-gr-id="24">per cent</g> of the deal value or of the prescribed market price, whichever is higher, will be imposed on all trading pacts. “Spectrum trading provides incentives for innovation, better/newer services being available to consumers at cheaper <g data-gr-id="25">tarriffs</g>,” the government said in an official statement. According to the official release, the spectrum trading will be permitted only on a pan-LSA (licensed service area) basis. 

“In case the spectrum assigned to the seller is restricted to part of the LSA by the licensor, then, after trading, the rights and obligations of the seller for the remaining part of the LSA with regard to assignment of that spectrum shall also stand transferred to the buyer,” the release said, adding, 

“Further, relevant provisions of NIA with respect to spectrum assignment in part of the LSA, which were applicable to <g data-gr-id="28">seller</g> before the spectrum trade, will apply to buyer subsequent to the spectrum trade.” According to telecom experts, the trading will allow operators to <g data-gr-id="26">monetise</g> their assets and reduce debt, thus helping the industry overall.

The much-awaited trading rules, coupled with the recently announced spectrum-sharing norms, will pave the way for consolidation in the fragmented telecom industry, which has as many as 10 operators in some circles, keeping calling rates at record lows and hurting the financials of telcos.

 

Operators such as Bharti Airtel,Vodafone, Idea, Telenor and newcomer Reliance Jio Infocomm can add to their spectrum holdings while others, including Reliance Communications (RCOM), Aircel, Tata Teleservices and Videocon Telecom can <g data-gr-id="21">monetise</g> their unused airwaves.