The Telecom Commission (TC) is all set to take up the proposal to relax the cap on spectrum holding by telecom companies on Tuesday. The commision, which is the highest decision-making body in the telecom ministry, will take up some proposals relating to Trai recommendations on spectrum cap, rollout of Wi-Fi hotspots under the Bharat Net project and increasing connectivity in Andaman and Nicobar Islands via submarine cables, telecom secretary Aruna Sundararajan said. According to current rules, no operator can have more than 25 percent of the total spectrum allocated in a circle and 50 per cent in a given band, but the Telecom Regulatory Authority of India (Trai) had recommended for a relaxation in the norms. We take a look at a list of recommendations that could be on focus today, and how it will benefit the telecom players.
Spectrum payment period extension
According to current regulations, 50% of the spectrum payment is made upfront, post which the companies get a 1-2 year moratorium period, and the balance amount is paid over the next 10 years. According to a report in Bloomberg, the Telecom operators want the period to be extended to 16 years.The telecom sector is reeling under a 2.9 lakh crore deferred spectrum liability, with Vodafone, Airtel and Idea having close to Rs 70,000 crore each. The move will help the companies to augment their cash flows, and better manage their liability.
Relaxation of spectrum caps
Current regulations mandate that no operator can have more than 25 per cent of the total spectrum allocated in a circle and 50 per cent in a given band, but the Telecom Regulatory Authority of India (Trai) had recommended for a relaxation in the norms. The relaxation in these norms is seen to benefit the Idea-Vodafone merger, as the merged entity breaches the caps in five circles. Brokerages estimate the value of excess spectrum being close to Rs 7,000 crore.
Lower interest rates on penalties
The telecom companies want the interest rates on penalties to be lowered to the current MCLR (marginal cost of funds based lending rate) at around 8 per cent for SBI, from the current rate at BPLR (Benchmark Prime Lending rate). SBI’s current BPLR is at 13.4 per cent.