The Telecom Commission has accepted a proposal by the Telecom Regulatory Authority of India (Trai) for raising the spectrum holding limit for service providers to 50 per cent of the available spectrum from the current limit of 25 per cent.
This will help telecom operators under stress as current rules prohibit combined radiowave holding in 700 MHz, 800 MHz and 900 MHz frequency bands, which is vital for transmitting signals, at 25 per cent of the overall spectrum available.
The Telecom Commission's call will help operators like Idea and Vodafone to keep excess spectrum once their proposed merger is in place.
Idea Cellular, a wireless operator, is the third-largest mobile service provider in India. In October 2017, Idea Cellular received approval from the shareholders and creditors of the company to proceed with its merger with Vodafone.
The combined entity would have a subscriber base of ~408 million with 22 3G / 4G circles. The new entity would also have a total spectrum of 1,850 MHz. As per management statements, the merger is expected to be complete in 2018. The company recently announced a capital raising plan of Rs6,750 crore through a preferential share allotment as well as a QIP.
Mukesh Ambani-owned Reliance Jio Infocomm (Jio) is also expected to gain from this decision as it can go for more 4G spectrum in the 850 MHz airwave.
The Department of Telecom (DoT) has prepared a draft of the recommendations, which is expected to be sent to the cabinet this week for final approval.
Besides, the move will also encourage further consolidation within the sector by giving a boost to M&As and spectrum sale, as operators try to sell their spectrum assets to get out of their debt.