Spectrum trading, which got the government’s nod on Wednesday, is likely to aid consolidation in India’s telecom sector and allow monetisation of assets from unutilized service areas, rating agency India Ratings and Research said.
“The industry could see emergence of four pan-India players (Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm), assuming they will retain spectrum in all licensed service areas (LSAs) while other players may maintain strategic regional presence by trading their spectrum holding in some LSAs,” the agency said in a statement on Thursday.
At present, there are more than six to seven operators holding spectrum in each of the LSA, of which two to three hold a miniscule market share.
India on Wednesday approved the much-awaited norms for telecom companies to trade in radio frequency spectrum in a move that can go long way in consolidating this scarce resource, improve the quality of service and even fetch revenues for airwave-surplus companies.
“We have approved the spectrum trading norms. Now, telecom companies can trade in spectrum among themselves. For this they need not take government permission,” Communications and IT Minister Ravi Shankar Prasad said after the approval at a meeting of the cabinet, adding the policy was expected to resolve the problem of fragmented spectrum holding in India.
India Ratings said: “Trading of spectrum will also help unlock funds stuck in the form of unutilised spectrum, which can be better used to grow infrastructure in LSAs of strategic importance.”
Therefore, spectrum trading can help in efficient allocation of this natural resource compared with auctions, the agency said.
“Auctions have a price uncertainty, and escalations in bidding prices similar to the past may prove the acquisition of additional spectrum to be more expensive. The spectrum trading guidelines could also provide marginal players an exit from the industry,” it added.