Telecom companies are bracing for the impact of the regulator's proposals on selling spectrum.
While Vodafone India has told the Government that it will have to take a Rs 26,700-crore hit if the proposal to re-farm 900 MHz frequency band is implemented, Norway's Telenor has written off another 3.9 billion kroner ($680 million) on its India operations. Post this write-off, Telenor has no further accounting exposure related to India.
“If the recommendation from TRAI in its current form is approved by the Government, it will be almost impossible to participate in the auction,” said Mr Sigve Brekke, Head of Telenor's Asia operations. Telenor had earlier written off 4.3 billion kroner ($724 million) as a result of the Supreme Court's ruling to cancel licences issued in 2008.
While Telenor is concerned about the TRAI's proposal to fix the base price for 1,800 Mhz band at Rs 18,000 crore, Vodafone is worried about the move to shift its spectrum usage from 900 MHz band to 1,800 MHz band. Vodafone said that if it is forced to shift, then it will have to put up 20,000 more cell sites to replicate the existing levels of coverage.
Re-auction from 2014
TRAI has suggested taking away all of the 900 MHz spectrum from existing players (issued in 1994) at the time of licence renewal starting 2014, and then put it up for auction.
This is being done so that all operators in the market have a fair chance to get bandwidth in this frequency band, which is considered to be superior to the 1,800 MHz band.
Vodafone has spectrum in the 900 MHz band in the10 circles coming up for licence extension in 2014 and 2015. The total investment in the network in these 10 circles to date is around Rs 16,700 crore. As the 900 MHz radio equipment at each site cannot be reused in a 1,800 MHz network, it will all need to be written off. In addition, it will cost around Rs 10,000 crore to shift its network to the new frequency.