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Cellcos get cold feet over spectrum sharing

4 Sep 2015

India’s cellcos have been reluctant to make use of the spectrum sharing in the absence of rules for trading frequencies, for fear that such short term measures could be harmful in the long run, the Economic Times writes, citing senior executives. Rules for sharing spectrum were introduced by the government last month, but the Department of Telecommunications (DoT) has yet to establish norms for trading airwaves. Trading and selling spectrum is seen by the industry as a better long term solution, as it would allow struggling operators to withdraw from the market whilst larger cellcos could bolster their holdings without taking part in expensive state-run auctions. Further, trading frequencies would allow the buyer to make use of the airwaves for the remainder of the licensing period, whilst spectrum sharing deals are only valid for five years. As such, sharing frequencies is seen as a much riskier option, and few operators are willing to commit before the DoT provides regulations for a secondary spectrum market.

Videocon’s CEO Arvind Bali explained that his company’s negotiations to sign spectrum sharing pacts with three cellcos have been delayed due to the current lack of clarity: ‘They all want clarity on the spectrum trading scenario before inking spectrum sharing pacts, as the trading option would enable a telco to acquire the airwaves of the other company keen to exit, something that isn’t possible in a standalone spectrum sharing scenario.’ An unnamed senior executive of another GSM provider echoes the sentiments, saying that trading and sharing of airwaves ‘must never be looked at in isolation, as it could lead to wrong business decisions and hurt a company’s brand, especially since both telcos sharing airwaves would be committing sizeable capex and opex.’

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