Not much scope for spectrum sharing : Idea Cellular

A day after TRAI gave its recommendations on the subject, Idea Cellular today said it was unlikely to go in for spectrum sharing in a major way.

The telecom operator said practical considerations would make it difficult to go in for spectrum trading even in 3G services, where spectrum sharing is widely expected to take place.

“Where 3G utilisation is high, in Kerala and Maharashtra, our spectrum usage charge is also of the higher order,” Idea CEO Himanshu Kapania said. “On a very high revenue, an incremental (charge of) 0.5% will deter us from doing spectrum sharing there,” he added.

TRAI had suggested that spectrum usage fee should be hiked for operators who go in for spectrum sharing.

According to rules recommended on Monday, companies like Idea Cellular, Bharti Airtel and Vodafone India will all be able to share their 3G spectrum with each other and create more efficient networks.

They will, however, find it more difficult to do the same for other services like 2G voice and 4G.

Kapania said many companies in India are trying to sell themselves, but high debt levels are making them unattractive to buyers.

He pointed out that the primary reason anyone would buy smaller operators in India would be for spectrum. Tata Teleservices and Aircel Cellular are seen as prospective takeover targets.

“Most of the operator needs are related to spectrum. That is why spectrum trading is the only route which will allow these companies, which have large bank (loans) outstanding and huge cash losses on an annual basis to cut down their size of operations and plan their exits out of the country. In our opinion, it will be very difficult for these companies, who have cash losses of $700 mln-$1 bln per year, and debt of $5 billion to $7 billion to be able to find a buyer who can turn around the business,” Kapania said.