CHENNAI: Cellular Operators Association of India (COAI) said on Thursday that among the decisions taken by the Telecom Commission (TC), relaxation of spectrum holding caps will prove to be beneficial for the telecom industry. However, the proposal to extend payment period for spectrum to 16 years from 10 years now will not yield any tangible financial benefits for telcos.
While this may give initial cash flow relief, the industry will end up shelling out more over the life of the debt on account of the extended timelines for spectrum payment, COAI argued. “The additional payment on account of this is expected to be around Rs 80,000 crore. Along with extending the deferred payment schedule, a nominal interest rate should have also been prescribed instead of the existing rates,” said Rajan Mathews, director-general, COAI.
The apex body representing companies such as Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm, gave a thumbs up to the TC’s decision to raise spectrum caps stating it will facilitate mergers & acquisitions, bring significant cost savings, reduce hyper-competition and stabilise the sector in the long run. The proposal will now go to the Cabinet.
The Telecom Commission had on Tuesday agreed to Trai’s recommendations, removing the 50 per cent cap on intra-band spectrum holdings of carriers post mergers, but putting a 50 per cent limit on the combined spectrum holding in the 700 MHz, 800 MHz and 900 MHz bands. Trai had also recommended that the overall cap on spectrum holding be raised from the existing 25 per cent to 35 per cent in a circle.
Such a move will facilitate telcos like Vodafone and Idea Cellular, which are in the process of merging their operations, among others, to mop up airwaves post mergers. Further, leading operators like Bharti Airtel, Vodafone and Idea Cellular also expressed dismay over the government’s inaction on the industry’s repeated calls for reductions in spectrum usage charge and licence fees.