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Telcos to pay extra for 2G spectrum

india Updated: May 12, 2010 01:26 IST
HT Correspondent
HT Correspondent
Hindustan Times
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In a major set back to existing GSM telecom service providers — Bharti Airtel, Vodafone, Idea and BSNL — the Telecom Regulatory Authority of India (TRAI) on Tuesday recommended that they should pay for 2G spectrum in excess of 6.2 MHz at the 3G spectrum price.

First reported in Hindustan Times, these operators were allotted on subscriber-linked criteria without charging any one-time fee.

On Monday, in the ongoing auction, the price for pan-India 3G spectrum crossed Rs 14,000 crore. In the Mumbai circle alone, the price of 3G spectrum stood at Rs 2,433 crore.

In Delhi, Bharti has 10 MHz spectrum — 3.8 MHz more than the 6.2 MHz it is authorised to use. Therefore, Bharti will have to pay for this 3.8 MHz extra spectrum for the balance period of licence (four years).

For up to 8 MHz of spectrum, the companies will have to pay at the rate of 3G price. For spectrum beyond 8 MHz, the company will have to pay at 1.3 times the 3G spectrum.

The regulator — whose recommendations may or may not be accepted by the government — has also called for a spectrum cap per operator of 10 MHz for Delhi and Mumbai and 8 MHz for other circles to be imposed on operators.

“As per our estimates, there is 156 MHz of spectrum beyond the 6.2 MHz allowed across India,” TRAI Chairman J S Sarma told Hindustan Times.

“So, going by the price being discovered for the 3G spectrum, it could amount to a revenue of Rs 30,000-35,000 crore for the government.”

The regulator also said that the operators would be allotted extra spectrum if they meet the roll out obligations. Which means, operators will have to begin offering telecom services in rural areas.

TRAI also made mergers and acquisitions norms easier, but ensured that any merger would have to pay a price for moving spectrum from one company to another. The regulator also proposes to delink licence with spectrum.

On the market, the news was received with dismay. All telecom company stocks fell -- while Idea and Reliance Communications fell by about 5 per cent, Bharti Airtel was down by 3 per cent, while Tata Teleservices and MTNL were down marginally by less than 2 per cent.