India's biggest telecom companies — Bharti Airtel, BSNL, Reliance Communications, Vodafone, Idea, Aircel Cellular and MTNL — will have to pay market prices for the excess 2G spectrum they already use.
The government plans to charge for this excess spectrum and offer it at market prices. The excess spectrum (anything more than the entitled 6.2 MHz) could either be auctioned or its price could be linked to the ongoing 3G spectrum auction.
“We are waiting for TRAI recommendation on this,” said a top DoT official on conditions of anonymity.
If the price is based on the 3G spectrum, existing operators currently using the spectrum will have the right of first refusal.
As per their licence conditions — issued between 1995 and 2008 — operators get 4.4 MHz of start up 2G spectrum. They get another 1.8 MHz of spectrum on the basis of subscriber-linked criteria. Hence they can get up to 6.2 MHz of 2G spectrum. The licences are silent on spectrum allotment beyond 6.2 MHz.
All old service providers have more than 6.2 MHz of spectrum in at least one circle and have been using it for many years without paying any one-time fee. They pay only an annual fee.
For example, in Delhi Bharti Airtel and Vodafone have 10 MHz of spectrum each, MTNL holds 12.4 MHz and Idea 8 MHz.
On Wednesday, the 3G bids for Delhi closed at Rs 1,845 crore for 5 MHz.
If the government asks these companies to pay this price, Bharti Airtel and Vodafone will have to pay Rs 1,402 crore each. MTNL will pay Rs 1,550 crore and Idea Rs 664 crore. The government will collect more than Rs 5,000 crore from Delhi.
Expanding this to all-India circles, the government could make as much as Rs 20,000 crore at market rates.
In an auction, revenues could be higher, “because investment on infrastructure is less in the case of 2G spectrum,” said BK Syngal, former CMD of VSNL (now Tata Communications).