"Cabinet has approved spectrum trading today. Telecom sector has been demanding it for optimum utilisation of spectrum," Telecom Minister Ravi Shankar Prasad said here. As of now only government is allowed to allocate spectrum to telecom firms through auctions.

"The ownership right will be with the Government of India. We give right of use to operators through auction. That right of use can be traded between two service providers," Prasad added.

Industry had been waiting for spectrum trading guidelines before they proceed with their consolidation plans. Deloitte Haskins & Sells LLP Partner Hemant Joshi said that spectrum trading would provide bigger players, who have congested networks, a chance to buy new spectrum and improve the quality of service for customers.

"Spectrum trading would provide exit opportunity to operators who have not been able to build scale in India and have been facing unprofitable operations by selling off their spectrum," Joshi said.

Last month, government approved spectrum sharing guidelines aimed at addressing spectrum shortage in the country and allowing operators to mutually use radiowaves to provide services. The government, however, has not heeded to the industry demand of keeping the amount received from trading out of the adjusted gross revenue. As per the rule, revenue from trading will form part of component to calculate licence fee and spectrum usage charges levied annually on telecom firms.

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