The IMG, in its recommendations submitted last year, had suggested the extension of time period for the payment of spectrum bought in auctions by operators to 16 years from the current 10 years.
It has also raised the cap on the spectrum that can be held by an operator to 35 per cent from 25 per cent of the radiowaves available in a circle. The new norms have set a cap of 50% on the combined spectrum holding in the sub-l GHz bands in a circle.
"With the restructuring of deferred payment liability, the cash flow for telecom service providers will increase in the immediate timeframe, providing them some relief".
According to the United States brokerage, scrapping of the earlier 50% limit put on telcos on holding airwaves within each band, post-mergers, will also enable Reliance Jio to target Reliance Communications' unsold, liberalised spectrum in the 800 Mhz band, considered among the best for 4G services.
Apart from raising the overall spectrum cap, the current intra-band cap has also been removed.
Bharti Airtel is India's top mobile carrier, while Vodafone Group Plc's India unit and Idea Cellular are merging their operations. "Earlier, the sale of such 800 Mhz spectrum would have breached Jio's 50% spectrum cap (in the 800 MHz band), but our calculation shows that with the increase in caps, Jio can now have the capacity for more spectrum in this band", Goldman Sachs said in a note to clients.
The Union Cabinet on Wednesday granted its approval for the relief package for the debt-laden telecom sector, as proposed by the Department of Telecommunications following clearance from the inter-ministerial Telecom Commission.
The Indian telecom industry, which is locked in an intense tariff war, owes a staggering Rs 4.6-lakh crore to various financial institutions and banks.
In that background, the move to extend payment period for the acquired spectrum will help as the pressures on cash flows will ease.
However, more comprehensive steps are needed, say experts. "We are grateful to the government for the benefits extended by way of extended payments and enhanced spectrum caps".
"The telecom operators will now be able to trade in excess [subject to the prescribed time limit] as well as the current spectrum held by them with other telecom operators depending upon their current spectrum holdings", said Niren Patel, partner, Khaitan & Co. The brokerage expects the price-led competitive intensity to remain elevated till market shares improve. Idea Cellular was trading 0.4 per cent higher at Rs 79.90 on the BSE, Bharti Airtel gained near 1 per cent at Rs 407.05 and RIL was also up close to a per cent at Rs 899.70.