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Corporate Oct 18, 2012

Refarming blow: Telcos may have to shell out Rs 60,000 cr

By Sindhu Bhattacharya

New Delhi: The GSM operators say they may have to shell out anywhere between Rs 60,000-70,000 crore if the government indeed goes ahead with a plan to refarm (reallocate) all the 900 Mhz spectrum now with various operators. Refarming, as decided by the Telecom Commission today, would mean the incumbent telcos surrender all spectrum in the 900 Mhz band, as licences in each circle come up for renewal and then bid for the same spectrum at new, much higher prices.

Speaking to Firstpost, Cellular Operators Association of India's Rajan Mathews said this plan, if approved by a panel of ministers, would be a unique exercise. "Nowhere in the world have 400 million customers been asked to switch networks under the garb of refarming".

Refarming would mean the incumbent telcos surrender all spectrum in the 900 Mhz band, as licences in each circle come up for renewal and then bid for the same spectrum at new, much higher prices. Reuters

He said the world over refarming of spectrum is not done by taking away this scarce commodity from incumbent telcos. Instead, non-users are asked to vacate spectrum. As per an independent study conducted by COAI, between Rs 25,000-30,000 crore would have to be written off for the present network as impairment charges, a similar amount would have to be invested in rebuilding networks for the less efficient 1,800 Mhz band (if incumbents cannot afford to bid back the 900 Mhz, which could be priced at twice the rate at which 1,800 Mhz is priced). And anywhere between Rs 10,000-20,000 crore is needed for bidding for fresh spectrum in the upcoming auctions".

But the lobby group which represents dual-technology operators - AUSPI - welcomed the TC's decision to refarm all available 900 Mhz spectrum.

"The decision is a right step in the direction of creating a level playing field between incumbent GSM operators and new GSM operators.Most of the 900 Mhz spectrum is held by three private operators, i.e. Bharti Airtel, Vodafone and Idea, for almost a decade without making any additional payment and hence they are likely to complain bitterly about this decision which we are confident will be confirmed by the EGOM (Empowered Group of Ministers) as it would provide an equal opportunity to all operators (including the incumbents) to acquire it through auctions in technically optimum chunks rather than a few operators hoarding it for perpetuating their monopoly," AUSPI Secretary General Ashok Sud said.

by Sindhu Bhattacharya

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