TRAI Recommended Liberal Shareholding Rules For Telecom Service Providers

Telecom Regulatory Authority of India (TRAI) has recommended liberal and relaxed shareholding rules for service providers provided the stakes do not lead to control of spectrum. This means that no spectrum trading would not be permitted. TRAI has provided its suggestions to the Department of Telecommunications (DoT).

Further, as per the recommendations, new service providers will be able to own more than 10% equity in more than one operator in a service area. However, it will be permitted only if the operator owns spectrum in just one company. This means that the substantial equity/cross-holding requirement should only be linked to spectrum holding.

For instance, a mobile service provider can own a company that is operating fixed line services in the same service area. This was not permitted under existing guidelines. At present, an operator is allowed to own more than 10% equity in only one company in a service area.

The regulator has also recommended that sharing of the spectrum should be permitted for the new operators. Old operators will have to pay the new price of spectrum determined through the auction.

If accepted, this would be a major relief to the new operators. Service providers are demanding that spectrum sharing should be permitted as it would reduce the cost of providing services and would increase efficiency.

Source: Corporate Laws In India.