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TRAI recommends six-fold hike in Spectrum price
Girja Shankar Kaura
Tribune News Service

SPINNING MONEY The price for 6.2 MHz of pan-India start-up 2G Spectrum has been proposed at Rs 10,972.45 crore, more than six times the present fee of Rs 1,658 crore Every MHz of additional Spectrum (on an all-India basis) beyond the contracted limit of 6.2 MHz should cost Rs 4,571.87 crore. Telecom firms could pay over Rs 15,000 crore for the additional Spectrum held by them The revised prices should be made applicable with effect from April 1, 2010, on pro-rata basis

New Delhi, February 9
Within days of Telecom Minister Kapil Sibal stating that telecom operators would have to pay the market price for the Spectrum held, the Telecom Regulatory Authority of India (TRAI) has recommended fixing the price for 6.2 MHz of pan-India start-up 2G Spectrum at Rs 10,972.45 crore, more than six times the present fee of Rs 1,658 crore. In its recommendations to the Department of Telecommunications (DoT), TRAI has also said that every MHz of additional Spectrum (on an all-India basis) beyond the contracted limit of 6.2 MHz should cost Rs 4,571.87 crore.

Most telecom firms, including Bharti, Vodafone, Idea and state-owned companies like BSNL and MTNL, hold Spectrum beyond 6.2 MHz and the new norms would be an additional burden to the tune of Rs 15,000 crore on these telcos.

The operators were granted additional Spectrum without any payment to the national exchequer, but were asked to pay just 1 per cent and then 2 per cent of the adjusted gross revenue (AGR) as Spectrum charge. The 1 per cent of the revenue as licence fee was levied on operators when the Spectrum capacity was increased from 4.4MHz in 2001 to 6.2 MHz. It was increased to 2 per cent of revenue as licence fee, when the operators were granted further Spectrum, raising it to 8 MHz in 2002. Some firms own 10 MHz Spectrum - granted to them in 2003.

Going by the recommendations of the TRAI, they could end up paying over Rs 15,000 crore for the additional Spectrum held by them.

However, despite the likely financial hit, the subscriber would still continue to be the king for operators. Analysts say this is due to as many as 14 operators competing in a single circle across the country.

Sources added that in the category of up to 6.2 MHz of Spectrum, the prices of one MHz varies from Rs 7.60 crore in the case of Jammu and Kashmir to Rs 187.38 crore in the case of Tamil Nadu.

In the category beyond 6.2 MHz of Spectrum, the price varies from between Rs 22.89 crore per MHz in Jammu and Kashmir to a maximum of Rs 431.95 crore in Andhra Pradesh.

The revised prices should be made applicable with effect from April 1, 2010 on pro-rata basis depending upon the number of years left for licences to expire, TRAI said. It added that any licence coming up for renewal would have to pay for Spectrum based on the new price.