"The top three telcos, including market leader Bharti Airtel, have increased their combined revenue market share to 73 per cent... Their ability to trade spectrum may curtail excessive bidding in future spectrum auctions," Fitch said today.
The government received the highest bid of over Rs 1.1 lakh crore in spectrum auction held in March. Idea Cellular made a bid worth Rs 30,307 crore to purchase spectrum. Airtel's stood at Rs 29,130 crore while that of Vodafone read Rs 25,959 crore.
Spectrum trading coupled with sharing will spur consolidation as it provides an exit route to smaller loss-making telcos that have struggled to generate positive operating cash flows, the agency said.
Additionally, Fitch Ratings said, the spectrum trading and sharing guidelines are likely to reduce regulatory uncertainty and ease network congestion.
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Under the guidelines, telecom operators can outright transfer spectrum held by them to the other company.
The agency expects Reliance Jio, RIL's telecom subsidiary, which is reportedly planning 4G services launch in December 2015, to acquire 800 MHz spectrum to provide better indoor coverage as it owns the spectrum only in 10 circles.
"RCom could be a source of this spectrum as it has continuous spectrum bandwidth in 800 MHz and already has a reciprocal infrastructure agreement with Jio," the agency said.
A report of Bank of America-Merrill Lynch also expressed similar views, which said RCom could liberalise its 800 MHz spectrum and hand it to Reliance Jio for 4G services.
"Smaller telcos -- including Tata Telecom, Videocon Telecom and Aircel -- make operating losses, are struggling to gain market share, and are saddled with high debt. These businesses could trade their under-utilised spectrum assets with larger telcos in loss-making Indian circles to focus only on profitable ones," Fitch said.