The Telegraph
Wednesday , January 29 , 2014
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Spectrum trade rules in place

New Delhi, Jan. 28: The Telecom Regulatory Authority of India (Trai) has allowed mobile operators to buy and sell spectrum acquired through auctions.

However, spectrum allocated by the government cannot be leased.

The government can charge a 1 per cent fee for spectrum traded between two companies.

The decision is expected to help firms such as Mukesh Ambani’s Reliance Jio, UK’s Vodafone and Norway’s Telenor. Vodafone, Bharti and Idea already account for about 69 per cent of the GSM revenue share in the market, and spectrum trading is likely to help them consolidate their position.

Telenor, which has become a major player in India, Bangladesh and Myanmar can buy airwaves, or spectrum, to build a presence across the entire sub-continent.

Hemant Joshi, partner, Deloitte Haskins & Sells said, “Spectrum trading is being allowed only for spectrum for which the market price has been paid. So spectrum acquired through administrative mechanism cannot be traded till a one-time spectrum price is paid. Spectrum for the full service area has to be sold and cannot be done for a part of the service area, which would have made spectrum use more efficient. This could be a damper.”

In the wake of the regulator’s trading guidelines announced today, Vodafone can look at purchasing 3G spectrum from another operator in circles in which it does not have airwaves.

The best part of spectrum trading is that it is far cheaper than buying out a company.

“For instance, if you buy out a firm, you pay not only for the spectrum it holds, some of it you don’t need because it is in circles you do not require spectrum but also for intrinsic values such as brand and goodwill,” said K.P. Joshi, an independent merchant banker specialising in offshore mergers and acquisitions.