DNA Money Edit: Finally, telecom companies to breathe easy

The long-awaited package for telecom companies that eased spectrum-holding caps and extended the payment period for spectrum acquired in auctions has brought cheers to the stressed sector reeling under the onslaught of the new player. The spectrum cap approval is in line with the industry's demands. Surely, it is expected to aid consolidation in the market. Deferred payments will also ease the woes of the debt-laden industry. Allowing operators to settle their dues to the government over a longer time period will boost their cash flows.

The government on Wednesday approved raising the overall spectrum cap per operator in a telecom circle to 35% from the current 25%. It also scrapped a rule that restricted operators from holding more than 50% spectrum in a single band in a circle. These changes will help Vodafone and Idea Cellular, which are all set to merge their operations. They will not have to surrender spectrum in seven circles where they would have breached the caps as a combined entity under the previous regime. The rule change also allows Reliance Jio to buy the spectrum owned by his brother Anil Ambani's Reliance Communications (RCom).

The government could also look at easing license fee, revenue share and GST at a later stage to lessen the pain for the industry later.