Vodafone, Idea Cellular merger: On spectrum cap, the new entity may gain; here is how

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New Delhi | November 17, 2017 6:23 AM

The merged entity of Idea and Vodafone may not have to surrender excess spectrum in about five circles because the Trai has concluded that the 50% cap in a given band in a circle needs to be relaxed with growing consolidation in the market where there are fewer players.

vodafone, idea, idea cellular, vodafone idea cellular merger, spectrum cap, new entity may gain, trai, Telecom Regulatory Authority of IndiaThe merged entity of Idea and Vodafone may not have to surrender excess spectrum in about five circles. (Image: Reuters)

The merged entity of Idea and Vodafone may not have to surrender excess spectrum in about five circles because the Telecom Regulatory Authority of India (Trai) has concluded that the 50% cap in a given band in a circle needs to be relaxed with growing consolidation in the market where there are fewer players. Current regulations mandate that no operator can have more than 25% of the total spectrum allocated in a circle and 50% in a given band. Trai is reconsidering it as the department of telecommunications has sent it a reference to examine whether a relaxation can be made as part of reform measures taken in the sector. The government appointed inter-ministerial group had also recommended that the 50% in-band cap should be relaxed. Trai has discussed the issue with operators and barring Bharti Airtel all others have favoured relaxing the 50% cap in a given band. While Bharti Airtel has opposed it stating that such relaxation will lead to a player having some sort of monopoly, it has supported the idea that the overall limit be raised from 25% to 33%.

Sources said Trai is likely to raise the overall limit also. Idea and Vodafone, which are in the process of merging their operations, will breach the 50% cap in a given band in five circles and would have to surrender some excess spectrum if the guidelines are not changed. The merged entity will breach spectrum caps in Kerala, Gujarat, Haryana, Maharashtra, and Uttar Pradesh (West) in the 900 MHz band and in Gujarat and Maharashtra in the 2500 MHz band.

The existing cap also prohibits Reliance Jio to acquire any more spectrum in the 800 MHz band from Reliance Communications, which is closing its wireless services by the end of the current month. “Relaxing spectrum caps is also part of enhancing the ease of doing business. The market conditions when the caps were put in place were different. To enable the current business environment function and grow further, there is a need to look at the spectrum cap as the market has changed and consolidation is happening. Now there are four players and hence the need for a review,” a Trai official said.

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