Airtel, Vodafone and Idea Cellular on Tuesday said that the proposal to re-farm spectrum will cost them over Rs 1 lakh crore.
In a letter to the Finance Minister, Mr Pranab Mukheree, the CEOs of the three companies stated that if the investments are not made to re-tune their networks to the new frequency, it could impact as many as 70 million subscribers.
The TRAI has proposed to shift incumbent operators from 900 Mhz frequency band to 1800 Mhz band. This has been agreed to by the Telecom Commission and a final decision will be taken by an Empowered Group of Ministers headed by Mr Mukherjee.
A report from research firm Analysis Mason said that the operators using 900 Mhz spectrum will need to replace 2,86,590 base stations and install an additional 171,954 base stations to provide equivalent coverage using 1800 Mhz spectrum. If the incremental investment incurred due to re-farming is passed on to the customers then tariffs would increase by 34 paise a minute, the report commissioned by the incumbent GSM operators said.
If the re-farming cost is not passed on to the consumers then operators' EBITDA margins will decline by 8 per cent, it said. “The report concludes that a decision having wide and serious ramifications as re-farming needs a proper consultation with the industry which unfortunately, despite having been promised by TRAI, has not been carried out,” the CEOs stated in their joint letter.
Spectrum pricing
Meanwhile, the CDMA operators have also separately written to the Communications and IT Minister, Mr Kapil Sibal, on the issue of spectrum pricing.
The Department of Telecom has proposed to impose a one-time fee on all incumbent operators including dual technology players such as Tata Teleservices and Reliance Communications. Incumbent operators will be asked to pay for all the spectrum they own for the remaining period of their licences. Since the two companies got GSM spectrum in 2010, they will have to pay for the remaining 18 years.