Govt approves spectrum cap reforms

8 Mar 2018

India’s Union Cabinet has approved relief measures for the telecom sector, revising limits on spectrum holdings and allowing operators longer to pay for airwaves won at auction, with a view to freeing up funds for investment, improving ease of doing business and allowing for consolidation in the sector. The government approved recommendations from the Telecom Regulatory Authority of India (TRAI) and the Telecom Commission to increase the overall spectrum cap from 25% of all licensed frequencies in a circle to 35% and remove the 50% cap for holdings with a particular band per circle. Instead, the latter will be replaced by a 50% cap on combined sub-1GHz (700MHz, 800MHz and 900MHz) spectrum holdings, with no upper limit set on spectrum in the higher bands. However, the government noted that the revised limits may be revisited following the ITU’s World Radiocommunication Conference (WRC) in 2019. The reforms will primarily affect mergers and acquisitions, simplifying the ongoing consolidation drive in the sector, but the government also hopes that the move will encourage providers to participate in the upcoming spectrum sale.

Operators have also been given a one-time opportunity to spread the cost of spectrum won at auction over 16 years rather than the current ten. ‘With the restructuring of the deferred payment liability, the cash flow for the telecom service providers will increase in the immediate timeframe providing them some relief,’ the government explained in a press release.