The Supreme Court’s ruling on telecom spectrum settles a long-running legal ambiguity. By holding that spectrum is a sovereign, finite natural resource held in public trust by the Centre, and that telecom operators merely enjoy a limited, conditional, and revocable right to use it, the Court has clarified what the market, lenders, and even regulators had allowed to blur over the years.
The Insolvency and Bankruptcy Code (IBC) framework, which only includes assets over which the corporate debtor has ownership rights, cannot be invoked to restructure, transfer, or treat spectrum as an asset of the corporate debtor in insolvency or liquidation proceedings. The judgment thus closes the door on a contentious interpretation of the IBC. Since spectrum is not an asset owned by telecom service providers, it cannot be transferred, monetised or restructured in insolvency proceedings. Operators do not purchase spectrum in the conventional sense. They win auctions but pay through deferred instalments over many years. What they acquire is a usage right for 20 years. The economic value is undeniable; spectrum underpins revenues, subscriber growth and average revenue per user. Yet economic value alone does not confer ownership. Banks, therefore, were always lending primarily against future cash flows, not against a repossessable asset. Treating spectrum as collateral was a legal fiction born of financial convenience.
The Court has rightly protected the doctrine of public trust. Natural resources, whether mines, airwaves or water, cannot be reduced to balance-sheet entries that migrate between creditors in liquidation. However, the judgment also transfers responsibility squarely to the government. If spectrum cannot be monetised in insolvency, telecom bankruptcies become structurally harder to resolve. The sector has already seen failures with over a dozen companies shutting shop. Banks may now have to write off more than ₹40,000 crore from defunct operators such as Aircel and Reliance Communications. Future lending to telecom will become more cautious, possibly costlier. That is precisely why policy must adapt.
First, the DoT must audit utilisation. Large quantities of spectrum remain underused because reserve prices have historically been set aggressively. Idle airwaves are not just a commercial inefficiency; they are a national waste. Second, pricing philosophy requires review. Auctions designed to maximise upfront revenue have repeatedly weakened sector balance sheets, indirectly harming competition and consumers. If spectrum pricing contributes to bankruptcies in a regime where IBC relief is unavailable, policy itself becomes a risk factor. The Centre must ensure spectrum serves connectivity goals rather than sitting warehoused. The Court has upheld the state as custodian, not trader, of spectrum. The corollary is unavoidable: stewardship must now replace revenue maximisation as the guiding principle. The verdict protects the public resource. It is now up to policy to protect the public interest.
Published on February 19, 2026