The telecom regulator has moved to relax shareholding rules for service providers as long as the stakes do not lead to control of spectrum. The recommendations make it clear that the spectrum trading would not be permitted. New service providers will be able to own more than 10% equity in more than one operator in a service area, if the government accepts a recommendation by the Telecom Regulatory Authority of India (TRAI) submitted on Wednesday to the Department of Telecommunications (DoT).

However, it will be permitted only if the operator owns spectrum in just one company.

“The substantial equity/cross-holding requirement should only be linked to spectrum holding...,” the TRAI said.

This means that 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.

“Operators, whose entire spectrum holding in a particular band, (900Mhz/1800 MHz and 800 Mhz band) has been liberalised and would be permitted to share spectrum without any additional one-time spectrum charge,” recommended the regulator.

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..