Industry
From the ashes of defunct telcos, there’s space for a new operator to rise
Summary
- Aircel holds about 59.6 Mhz of spectrum across 9 circles, and another 65 Mhz across 13 circles, while Reliance Communications holds 58.75 Mhz across 15 circles—all of which remain unused amid a long-drawn bankruptcy hearing
- A new operator, however, could emerge by aggregating the unutilised bands
Aircel’s former owner C. Sivasankaran was in the news recently revisiting the question of whether he had to purportedly sell his controlling stake in the company due to political pressures.
Whatever be the merits of the case, which has gone through all sorts of permutations since he made the allegations in 2011, and given that the merger with Reliance Communications is still in the works, what has been wasted in all these years is the spectrum not put to use.
The wastage was repeatedly highlighted in the National Company Law Tribunal for close to a decade as the successor company Maxis-Aircel and RCom pushed for a merger of their wireless services business. At every stage, however, regulatory delays and opposition from some or the other creditors have stymied the plan.
Currently, RCom and Maxis-Aircel hold bits and pieces of spectrum in the 800, 1,800 and 2,100 Mhz bands. Aircel holds about 59.6 Mhz in the 1,800 band across nine telecom circles, and another 65 Mhz in the 2,100 band across 13 circles. RCom holds 58.75 Mhz of spectrum across 15 telecom circles in the 800 band, and a similar fat chunk in the 2,100 band.
As these holdings show, they are broken pieces. The Aircel bits are mostly concentrated in the unlinking side of the airwaves in the 1,800 Mhz band, as the company did not have the money or the regulatory space to buy the corresponding bits on the other side. The same holds for RCom too.
Also, if one examines the bands, the mobile apparatus ecosystem in India has moved on from the 1,800 Mhz band, the most sought-after for voice telephony at one time. Similarly, the digital revolution has also bypassed the 2,100 Mhz band. RCom holds a thin sliver of spectrum in the 900 and 1,800 bands, too.
Also read | Allot or auction satellite telecom spectrum? Signal clarity, please
Yet these are valuable bands because by squatting here, these companies have pushed up the costs of the competing bands for other telecom operators, and thus for the consumers. The never-ending legal disputes ensured that the department of telecom could not put these bands up for auction.
Of course, the government, in its ceaseless attempt to maximise the revenue potential from auctions in the sector, possibly did not mind. But the cost for the Indian telecom sector cannot be missed. Because of this dead wood, the holding of spectrum by Indian telecom companies in various bands is smaller than the corresponding packages in other Asian countries, or, often, non-contiguous.
A huge reason for slow internet and call congestion suffered by all operators is these blockages, akin to riding a vehicle on Indian city roads of varying widths, often shrinking or expanding in stretches. Higher pollution loads on roads are matched by call drops or slow internet in the telecom world.
The unutilised spectrums are similar to the defunct but potentially rich oil wells of yore, serving as examples of opportunities missed. In fact, one reason why Aircel and RCom, despite being in bankruptcy courts, are often seen as valuable are the spectrums in their possession.
Also read | The government wants to allocate, not auction, spectrum–and that’s a good move
Those airwaves open up tantalising possibilities for the emergence of a new telecom operator that can aggregate the unutilised bands to offer viable competition to the incumbents.
Potentially, these spectrums will come cheaper if a bidder buys these companies, as the airwaves would be a part of the package. Then the price will be far cheaper than those discovered at the pricey telecom auctions. Managed with some strategic buys from periodic auctions, the buyer, or buyers, can offer a slew of data-based value added services to the vastly expanding Indian digital market.
Of course, for this very reason the government may not be keen to change the status quo, since those buys would undercut the prices set for competing bands in its spectrum auctions. By all reckoning, those have been stiff, which is why none of the telecom service operators is keen to buy anything of late from the auctions, except when their licences are about to expire.
It is in the interest of India’s economy that the dead zones in the spectrum bands come into play once again. This will, however, require imagining the state of play of these spectrums with a long-term vision by the regulators.
