Spectrum trading – Aircel planning to sell its spectrum in circles like Kerala, Punjab etc?

With spectrum trading rules promulgated, all eyes are on two key players — Aircel Cellular and Tata Teleservices — wondering whether they will sell coveted 3G and 4G spectrum held with them.

Operators like Bharti Airtel, Vodafone and Idea Cellular are known to be keen to buy spectrum from these operators.

Adding fuel to speculation that Aircel may be selling its spectrum is a recent statement from the company that it is going to invest in its 3G circles in Tamil Nadu, Odisha, West Bengal and Kolkata.

“3G sites are planned primarily in regions such as Chennai, Rest of Tamil Nadu, Kolkata, Rest of West Bengal and Odisha, the focus for the 2G network expansion are regions such as Delhi, Bihar and Rajasthan to improve network performance,” the company said.

The news that thousands of 3G sites will be added in these three states is welcome news.

However, that also raises the question: What about the other states where Aircel has 3G spectrum?

Besides the above three states where Aircel is one of the established operators, the company has 2G and 3G spectrum in many others. Key among these states are Andhra Pradesh, Karnataka and Kerala, where the company has both 2G and 3G spectrum.

Another crucial state is Punjab, where the company has both 2G and 3G spectrum but very few subscribers.

The omission of the names of these states from the company’s statement on expansion plans has set tongues wagging about possible spectrum trading deals in these areas.

Aircel also has 4G spectrum (20 MHz) in Andhra Pradesh, Tamil Nadu, West Bengal, Bihar, Orissa, Assam, North-East and Jammu & Kashmir, acquired at a price of Rs 3,438 cr five years ago.

While 3G and 4G spectrum can be sold without much ado, selling 2G spectrum will trickier as it would require the company to first ‘liberalize’ the spectrum by paying money to the government, and then find a buyer who would be interested in getting hold of the spectrum.

Not everyone can make use of Aircel’s 2G spectrum as it would need to be clubbed with an adjoining block of 0.6 MHz to enable the launch of 4G services.

In Andhra Pradesh, Aircel has 4G spectrum as well.

Industry sources say that selling spectrum would help the company reduce losses arising from high debt costs.