Telecom players differ over spectrum capping

NEW DELHI: Telecom operators are divided on the cap that should be imposed on the spectrum held by them in a particular service area. This debate which leads up to an open house with Trai next week is critical as it will mould the future of M&As in the telecom sector which has up to 14 operators per circle with an average holding of merely 5.7 MHz of GSM spectrum. While some companies have up to 10 MHz in a handful of circles, most are at one-third of the world average of roughly 17 MHz per operator. Another related development to these caps will be the spectrum transfer charge and rules under with companies can consolidate spectrum following M&As — which are currently restricted under the M&A guidelines of April 2008. While all operators concede there should be a cap, they have wide-ranging differences depending upon their position, current possession of spectrum and future needs. In response to the Trai consultation paper which is to decide the critical issue of spectrum allocation among telecom operators in India, the responses are divided between existing and well-entrenched GSM operators, dual technology operators providing both CDMA and GSM services, and new entrants who are yet to launch services after having been granted licences in 2008. Companies like Datacom, Unitech, Bharti, Reliance, Idea, and Aircel have argued in favour of a cap of 25% of the total commercial spectrum assigned in a service area irrespective of technology mix or spectrum band deployed. This also implies that they expect every circle to have no less than four operators at any given point in time post the consolidation that is expected over the next two years. MTNL wants a maximum cap of 15 MHz per operator in GSM spectrum, and 10 MHz per operator in CDMA spectrum. Etisalat and Tatas advocate a 12.4 MHz cap in GSM spectrum per operator. However, on the CDMA side, Etisalat is silent while Tatas seek a cap of 10 MHz per operator. Industry associations COAI and AUSPI have predictably followed the same tune as their members. AUSPI's position is consistent with Tatas — seeking a cap of 12.4 MHz in GSM and 10 MHz in CDMA, while COAI has gone with the vast majority of GSM operators who have sought a cap of 25% of total commercial spectrum available in a circle. Both Vodafone and BSNL have agreed to a cap but not given a specific number, while Vodafone has referred to setting the spectrum cap in the context of spectrum holdings of efficient international operators. After the open house, Trai will submit its recommendations to the telecom department, which will take a final call on the matter. It is likely that DoT's decision will come after the 3G auctions, which are expected in January-February 2010.
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PALLAVI SINGH

PGDM III SEM