Airtel, Vodafone, Idea write to FM against refarming proposal

Chiefs of telecom giants Bharti Airtel, Vodafone and Idea Cellular have sought Finance Minister Pranab Mukherjee's intervention to ensure that they are not asked to migrate to 1800 Mhz of spectrum.

In a letter to the Finance Minster, they also said that if the Trai proposal of spectrum refarming is implemented, it may result in call rates going up by as much as 64 paise a minute.

Telecom regulator Trai has proposed that existing operators migrate from current 800 MHz and 900 MHz spectrum to 1,800 MHz when their permits come up for renewal, at a fee discovered through auction.

"We request your most urgent, personal intervention to ensure that no further decision on re-farming 900 Mhz is taken, at the very least until, a thorough consultation is carried out," the telcos.

The letter was jointly written by Bharti Airtel CEO (India and South Asia) Sanjay Kapoor, Vodafone India MD and CEO Marten Pieters and Idea Cellular Managing Director Himanshu Kapania.

CDMA operators' body AUSPI, however, is in favour of spectrum refarming. Once accepted, CDMA players will have to use 1900 Mhz band instead of the present 800 Mhz band for transmitting signals for mobile services.

The telcos have commissioned a study through Analysys Mason to analyse the impact of spectrum refarming on the industry.

Citing findings from the report, the operators said if the incremental investment in refarming and spectrum costs are passed on to the consumer, "the average tariffs will go up as much as 64 paise per minute (30 paise due to refarming and 34 paise for spectrum investment)".

The study added that after moving to 1800 MHz, operators using 900 Mhz spectrum would need to replace 2.86 lakh base stations and install an additional 1.71 towers to provide equivalent coverage.

This would require an incremental capex of Rs 54,739 crore and incremental annual operating expenditure of Rs 11,762 crore.

An additional capex of about Rs 26,653 crore would be required to deploy new towers to support the incremental base stations, it added.

The report said the Trai recommendations (on refarming) will have a "substantial cost to the industry, result in an increase in retail tariffs and cause significant inconvenience to consumers, with no benefit to any involved stakeholders."

The operators said that they would have to write off existing 900 Mhz assets that will cost an estimated Rs 22,310 crore.

The letter said the Trai recommendations had "hastily" concluded that refarming should be carried out progressively no later than expiry of existing licences in 2014-16.

This, it said, was done "misinterpreting and applying the Supreme Court order to reserve the spectrum vacated through licence cancellation for refarming."