Fitch has stated that ability of telecom operators to trade frequency airwaves may limit excessive bidding in the future spectrum auctions. It contended that spectrum trading and sharing will drive consolidation as it will provide exit route to smaller players in the market that have struggled to generate positive operating cash flows. It added that spectrum sharing and trading guidelines are also likely to reduce uncertainty in the sector and ease network congestion.

The credit rating agency is of the view that the top three operators – Bharti Airtel, Vodafone India and Idea Cellular – may further consolidate their market share if they acquire spectrum from smaller operators. It believes that approval of trading guidelines is positive for Reliance Communications (RCOM), which can reduce its leverage by monetising under-utilised spectrum in the 800 MHz band.

Meanwhile, Fitch reckons that smaller operators could trade their under-utilised spectrum with larger operators to focus on only profitable markets.