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Four strategic impact of spectrum trading and sharing on telcos

We see possibility of the following strategic impacts of spectrum trading and sharing in telecom service providers segment

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Soma Tah
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Thomas George

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The government approves spectrum trading and it’s quite encouraging news for telecom service providers, who are constrained with low availability of spectrum, while a few others have unutilized ones in their kitty. Many possible scenarios emerges over here with the spectrum sharing and trading opportunities.

Based on the new norms, we see possibility of the following strategic impacts in telecom service providers segment:

Firstly, most of the smaller telecom service providers will give their spectrum to the larger players in certain circles and may exit from few circles. This would means most of the larger service providers will stand gained and will move toward closing the existing gap in their spectrum map. It will provide required headroom to grow further. We will witness more aggressive competition amongst the large and leading players.

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Secondly, competition from smaller service providers will get reduced as they may exit selectively from certain markets.

Thirdly, the tower companies might benefit from major telecom companies going ahead and reconfiguring their network. However, the need for more towers might decline and affect the growth of tower business barring the leading ones like Indus Towers and Bharti Infratel.

Fourthly, service providers likes Reliance Jio stands a chance to leverage on RCOM spectrum in 800 MHz, which can assist them in their VoLTE launch and enhancement of its network quality with in building coverage.

This move could drive consolidation in telecom service providers segment, in the absence of favorable M&A regulations.

telecom