Leading telecom companies Bharti Airtel and Vodafone India are in for more trouble ahead with the Telecom Commission recommending that they would have to
give up the entire 900 MHz band of spectrum (being used for 2G services, which gives wider coverage) they hold when their licences come up for renewal in 2014.
In order to continue operations, these companies would have to compete with other players in a fresh auction for this band of spectrum. Bharti Airtel and Vodafone hold over three-fourths of the superior 900 MHz spectrum.
Telecom companies are against refarming and said it would result in an increase in call rates by at least 64 paise a minute. GSM operators claim that the decision could cost them over Rs 66,000 crore in replacing infrastructure.
However, the government expects to make more money in the auction as these companies would have to bid aggressively to win back the spectrum.
BIG TELCOS TO PAY MORE
Due to refarming, Bharti Airtel, Vodafone India and Idea will need a capex of Rs 54,739 crore, and incremental annual operational expenses of Rs 11,762 crore
Operators like Bharti Airtel, Vodafone and Idea will now have to bid aggressively for the less efficient 1,800 MHz spectrum in the upcoming auction to ensure that they have at least 5 MHz for liberalised use of telecom services even as they lose 900 MHz during refarming
This will push up the auction price and create competition amongst operators in the upcoming auction
The government had allocated spectrum in the 900 Mhz band to companies in 2001 for Rs 1,658 crore for pan-India services
|
The licences of existing players for metro circles are coming up for renewal in November 2014 and for other circles in 2015 and 2016.
Secretary of the
Department of Telecommunciations (DoT) R. Chandrashekhar, who is also the chairman of the Commission, said the entire spectrum in 900 MHz will be "refarmed".
According to Chandrashekhar, existing operators will be allowed to bid in the auction for 900 MHz band, which is likely to take place in the first-half of 2013.
"If the same operator emerges as the highest bidder, it will retain the 900 MHz spectrum. However, if the incumbents fail to win the spectrum, they will be given 18 months to move to 1,800 MHz, for which an equivalent amount of spectrum will be made available to them in the new band," Chandrashekhar said, after a DoT meeting.
"The time given for the changeover will be used for making alternative plans to put infrastructure in place before it gets the spectrum."
The recommendation will be put
before the empowered group of ministers, headed by finance minister P. Chidambaram.
The Cellular Operators Association of India (COAI) said operators with 900 MHz band will need to replace 286,590 base stations and install an additional 171,954 to provide equivalent coverage on 1,800MHz. However COAI's rival, the Association of Unified Telecom Service Providers of India (Auspi), welcomed the recommendation.
"The decision is a right step towards creating a level-playing field between incumbent GSM operators and new ones," said Ashok Sud, secretary general, Auspi.
In association with Mail Today 
Bharti Airtel Chairman Sunil Bharti Mittal 
Special 
