The Telecom Regulatory Authority of India (TRAI) on Wednesday announced a new set of guidelines for allocation of spectrum that called for a sharp rise in pricing that could multiply charges six-fold.
New companies will have to pay Rs 10,972 crore for start up spectrum of 6.2 MHz for pan-India operations whereas the current operators paid only Rs 1,658 crore.
The recommendations need the approval of the Department of Telecommunications (DoT) to take effect.
Experts say the costlier spectrum will not hit consumers as 10 to 12 players serve each region, providing for stiff competition in which tariff hikes are difficult.The hit could financially affect telecom service operators, especially incumbent service providers who hold more than 6.2 MHz which may force those who are not efficient in using spectrum to return some of it to the government.
The regulator has fixed a price of Rs 4,571.87 crore for pan-India spectrum for each MHz beyond 6.2 MHz. For example, if a company gets 7.4 MHz of pan India spectrum, it would have to pay Rs 15,544 crore.
The new tariffs would be applicable with effect from April 1, 2010 on pro-rata basis depending upon the number of years left for licences to expire, said J. S. Sarma, chairman of TRAI. "Any licence coming up for renewal would have to pay for spectrum based on new price," said Sarma.
"It will not have any impact on tariff for consumers. If this spectrum price is distributed over the huge subscriber base that an operator has, the impact is negligible," said Mahesh Uppal, director, ComFirst, a telecom consultancy firm.
"As far as the telcos are concerned, they will have to shell more money. However, it will not shake up their financials. They were already expecting it."
The spectrum price varies from circle to circle in both categories. In the case of contracted 6.2 Mhz limit, the price ranges from R7.60 crore per Mhz in Jammu and Kashmir to Rs 187.38 crore in Tamil Nadu.
For the additional spectrum the range is R22.89 crore in Jammu and Kashmir to Rs 431.95 crore in Andhra Pradesh.
While incumbent Vodafone Essar decried the TRAI move, new entrant Uninor welcomed it. Vodafone Essar’s CEO Marten Pieters called the guidelines "illogical and discriminatory."