Cabinet clears spectrum trading guidelines for telecom compa

Jaswinder Singh Baidwan

Akhran da mureed
Staff member
The Union Cabinet today approved the rules for spectrum trading, which will allow the telecom companies to buy and sell spectrum among themselves.
The move comes close on the heels of government earlier allowing telcos to share their spectrum resources for significantly increased efficiency in spectrum usage. The decision was announced after the meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.
Making the announcement, Telecom Minister Ravi Shankar Prasad said, “Spectrum is owned by the government and only its right to use can be traded”.
“We have approved the spectrum trading norms today. Now the telecom companies can trade spectrum among themselves. For this they need not take any government permission,” he said.
“The telecom companies only need to inform the government 45 days in advance before trading and they have to give an undertaking,” the minister added. Prasad said trading will also resolve the problem of fragmented spectrum holding in India.
The move is designed to allow telcos to utilise unused airwaves in a better way. It also allows telcos to acquire spectrum outside of the current auction system and helps struggling companies looking to exit the business to sell the airwaves they have. Terming the decision as a “revolutionary step”, Prasad said, “Spectrum trading has been permitted in all the bands”.
According to the approved guidelines, telcos will have to inform the government 45 days before the transaction and will have to pay 1% of the transaction amount as trading fee.
Experts said the approval for spectrum trading could lead to major merger and acquisitions moves in a market which is not only highly competitive but also has a large number of telecom operators, much against the trend around the world.Currently, there are around 11 telcos in the country as compared to the five that is considered healthy for competition in any market.
This, coupled with the scarce quantum available for the communications services, and fears of radiation from telecom towers in the country, has led to poor service quality, especially in metro areas.
The first impact of this announcement could be on the ongoing merger talks between Russia’s Shyam Sistema Teleservices Ltd, which runs services under the MTS brand and Anil Ambani Group promoted Reliance Communications (RCom). The latter needs the merger for its business continuity purposes.