Path set for smoother telecom consolidation

EASIER RULES Telecom Commission accepts proposal to ease spectrum holding caps

NEWDELHI: The Telecom Commission (TC) 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.

TC, 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, a person present at a meeting of the commission said 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 (700 MHz, 800 MHz and 900 MHz 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 Reliance Jio could look

to buy the rest of the spectrum owned by his brother Anil Ambani’s Reliance Communications Ltd, especially in the coveted 800 MHz band.

Under current spectrum holding norms, if Jio were to buy all of Reliance Communications’s spectrum in the 800 MHz band, it would breach caps across 11 out of the 23 telecom circles.

The hurdles faced by Vodafone-Idea Cellular and Reliance 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 Reliance Jio with free voice and data services that disrupted the industry. Reliance Communications 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.

In December, Reliance Jio said it would buy a majority of the wireless assets of Reliance Communications, which include 122.4 MHz of 4G (fourth generation) spectrum in the 800/900/1,800/2,100 MHz bands.

“Even after the Jio deal, RCom is left with almost 50 MHz spectrum in the 800 MHz 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,” another person with direct knowledge of the matter said.

While an increase in the spectrum caps is good news, it would 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 optimising 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,” Rajan Mathews, director general at telecom lobby group Cellular Operator Association of India, said.

When contacted, Bharti Airtel, Idea Cellular and RCom declined to comment. An email query sent to Reliance Jio was unanswered.

“Vodafone welcomes Telecom Commission’s acceptance of TRAI’s recommendation for a higher cap on spectrum holdings of telecom operators. This will benefit customers, government and industry,” Vodafone said.