Mobile operators holding over 6.2 MHz spectrum need to spend over Rs 10,000 crore

Telecom Lead India: Mobile operators holding over 6.2 mega hertz spectrum need to spend over Rs 10,000 crore.

Telecom minister Kapil Sibal

The levy applicable for four years, starting 2008, will be based on the 2001 price of spectrum (Rs 1,650 crore) and will be indexed to inflation.

This will be a fresh blow to 54 licence holders in India. Airtel, Vodafone, Idea Cellular, etc. will face financial pressure due to additional telecom Capex and investments.

There is also silver lining in this development as the panel recommended the retrospective surcharge be indexed to the 2001 price of spectrum, and not to the auction, whose starting price is more than seven times the 2001 price.

From next year, mobile service providers will have to pay for spectrum over 4.4 mega hertz (GSM players) and over 2.5 Mhz (CDMA players) which will fetch the government another Rs 27,000 crore if last week’s decision of the empowered group of ministers is endorsed by the Union Cabinet.

The fee will be based on spectrum price determined in the auction and will be imposed from the time the Cabinet approves it.

On Thursday, the ministerial panel headed by finance minister P Chidambram deferred a decision on changing the frequency band for GSM operators. Spectrum refarming will cost operators around Rs 55,000 crore in addition to over Rs 1 lakh crore.

Telecom minister Kapil Sibal said the EGoM deferred a decision on the spectrum refarming issue as there wasn’t enough time. On Wednesday, the Telecom Commission approved a plan which will force GSM operators to switch to 1800 Mhz frequency from 900 Mhz at present.

The telecom companies will have the option to bid for 900 MHz spectrum in the second half of 2013. Those who are not successful would then have to vacate the band within 18 months and move to 1800 Mhz within 18 month on paying the market price. The reserve price for bidding for 5 Mhz of spectrum in the 1800 Mhz band has been fixed at Rs 14,000 crore.

Meanwhile, media reports suggest that both MTNL and BSNL will not be bidding for spectrum this year. The government is hoping to raise 400 billion rupees from the auction. It has set the auction base price at 140 billion rupees ($2.6 billion) for 5 MHz of 2G airwaves in the 1800 MHz band for all of India’s 22 telecoms zones.


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