The Indian government has taken proactive measures in an effort to relieve the financial pressures currently being endured by mobile operators in the country. Telecommunications operators in India have encountered a series of financial problems over the past twelve months, and that forced the cabinet to take action.
Reports emerging from the country have reported that the cabinet has increased the spectrum holding limit in a service area from 25% to 35% and extended the payment terms from ten years to a period of 16 years.
By increasing the spectrum gap, the primary objective of the cabinet is to encourage consolidation in the mobile industry by making it much easier for operators to sell off spectrum assets in order to pay down debt. In addition to this, the extended payment terms that have been established in relation to spectrum purchases are designed to help increase cash flow and give near-term relief to operators faced with huge debts, and falling revenue and profitability.
In addition to this, it was disclosed that the cabinet also agreed to approve Telecom Commission recommendations to eliminate a 50% limit on intra-band spectrum holdings. However, they opted to impose a separate 50% cap on combined spectrum holdings in the 700MHz, 800MHz and 900MHz bands.
Director General of Cellular Operators Association of India, Rajan Mathews, said the new spectrum caps will enable consolidation in the industry. He said, “The systemic issues of the industry still remain unaddressed, like excessive taxes and levies of 30 per cent or more. We hope the government will accelerate these relief measures.”