Airtel, Vodafone and Idea to face financial crisis as Telecom Commission wants entire spectrum in 900 MHz to be refarmed

Telecom Lead India: Mobile operators such as Bharti Airtel, Vodafone and Idea Cellular will be under financial pressure as the Telecom Commission recommended existing operators surrendering the entire spectrum in 900 MHz band at the time of their licence renewal in 2014.

Telecom Secretary R Chandrashekhar

“The entire spectrum in 900 MHz will be refarmed,” said Telecom Secretary R Chandrashekhar.

Three different options were put before the commission, which included refarming of all airwaves held by incumbents, or allowing the operators to retain either 2.5 Mhz or 5 Mhz of airwaves frequencies in 900 Mhz band.

The commission decided that entire spectrum will be refarmed which means above 0 (Mhz).

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The EGoM is likely to meet on Thursday and the recommendations of the commission will be presented to the empowered group of ministers (EGoM) headed by Finance Minister P. Chidambaram for its final decision.

Existing telecom operators will be allowed to bid in the auction of 900 MHz band, which is likely to take place in the first half of 2013. If they are successful, they can retain the spectrum.

However, if the incumbents fail to win the spectrum, they will be given 18 months to move to 1800 MHz for which an equivalent amount of spectrum will be made available for them in the new band, PTI reported on Wednesday.

“If the same operator succeeds, he will retain it, if a new person succeeds, then the existing operator has 18 months to make his alternative plan and the new operator will have 18 months to put his infrastructure in place before he gets the spectrum,” Chandrashekhar added.

The licences of existing players for metro circles are coming up for renewal in November 2014 and for other circles in 2015 and 2016.

The government has in-principle approved the concept of spectrum refarming under which old operators like Bharti Airtel and Vodafone have to surrender spectrum allocated in 900 Mhz band  on expiry of their licences.

The base price for 900 Mhz band spectrum is proposed to be charged at double the price of 1800 Mhz spectrum band. The government had allocated spectrum in 900 Mhz band to companies from 2001 for Rs 1,658 crore for pan-India services.

Telecom companies are against refarming, saying it may result in call rates going up by as much as 64 paise a minute.

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