India’s government yesterday approved the sharing of spectrum between mobile operators but has not yet made a decision on the trading of spectrum, a long-awaited reform that many say could kick off a wave of mergers and acquisitions in the country’s crowded mobile industry.

The cabinet has put off a decision on spectrum trading after operators complained that a proposed 13 per cent tax on the proceeds of spectrum trades amounted to double taxation, the Economic Times reported.

The Cellular Operators Association of India (COAI) sent letters earlier in the week to the Prime Ministers Office, the Finance Ministry and Department of Telecom (DoT) objecting to the new levy on spectrum trades.

The approval yesterday will allow spectrum sharing only between two operators in one service area, where both have spectrum in the same band. Operators can apply for a five-year permit for sharing, which can be extended by another five years, the Times said.

Operators have long said that sharing would allow them to make more efficient use of their limited spectrum resources and improve network quality as well as reduce their capex.

In June the DoT finalised the rules on spectrum sharing and trading and sent them to the cabinet for approval.

Telecom Minister Ravi Shankar Prasad told that Times that: “This will be a game changer for the industry. Some operators have a large customer base and less spectrum, whereas it is the opposite for others. Sharing will allow efficient utilisation of bandwidth and help address issues of call drop and call congestion.”

Operators will have to pay a spectrum usage charge of 0.5 per cent on shared spectrum. They will be limited to holding 25 per cent of the spectrum in one service area and can’t hold more than 50 per cent of the airwaves in a single band (in one service area).

Operators need to apply 45 days before planning to share spectrum and each pay a INR50,000 ($770) processing fee for each service area. The government will not allow the sharing of non-auctioned spectrum, unless the market price is paid. The leasing of spectrum also is not allowed.