Indian Govt clears spectrum trading guidelines

By | September 9, 2015

Indian Govt has cleared the spectrum trading guidelines paving way for efficient utilization of surplus spectrum with smaller telecom operators. Telecom shares soared after announcement of new guidelines on spectrum sharing.

Reliance Communications rose by 11.57% to trade at Rs. 62.20, while Bharti Airtel and Idea surged by 2.44 per cent and 2.12 per cent at Rs 355.20 and Rs 149.20, respectively, on Wednesday. Until now only Govt. used to sell spectrum to telecom carriers, but from now on, any telecom company with unused spectrum can sell or trade it with other telecom company in need of the same.Cabinet clears spectrum trading guidelines

These days leading operators like Airtel, Vodafone and Idea have to deal with spectrum scarcity, however, with spectrum trading in place now they can buy additional spectrum to address this issue.

“Cabinet has approved spectrum trading today. Telecom sector has been demanding it for optimum utilisation of spectrum,” Telecom Minister Ravi Shankar Prasad said here. As of now only government is allowed to allocate spectrum to telecom firms through auctions.

Govt still remains the owner of telecom spectrum, but two telecom companies now have right to trade in spectrum without any prior approval from any govt department. However, concerned company needs to inform the licensing authority 45 days prior to entering into trading agreement.

Some feel that spectrum trading will aid in true price discovery of the spectrum. Until now, spectrum auctions are used to decide the value of spectrum. There will be a lock in period of 2 years before the traded spectrum can further be put up for trading.

The new spectrum trading guidelines will help 4G LTE players the most, as companies such as Reliance Jio can trade in more efficient 800 MHz spectrum from CDMA operators like RCom, Tata Docomo or MTS.