Telcos jittery as TRAI moots six-fold hike in spectrum prices

The Telecom Regulatory Authority of India today proposed to the government large increases in the price of second-generation (2G) spectrum that service providers use for mobile telephony.

In its recommendations to the department of telecommunications (DoT), TRAI has recommended an in all-India spectrum price to Rs1,770 crore ($391 million) per megahertz for up to 6.2Mhz and to Rs4,572 crore per Mhz for spectrum beyond that.

In comparison, telecoms firms have paid an estimated Rs268 crore per Mhz in previous allocations, the regulator said in a release from New Delhi.

The regulator had recommended in May last year that mobile carriers pay a one-time fee for holding 2G radio spectrum beyond 6.2 Mhz based on 3G prices, a move that would hit established companies and drew protests from them. Later in the month, TRAI said it would do further study on spectrum prices and submit fresh proposals.

Although TRAI's proposals are not binding, they have spread shock waves among service providers, as they have huge financial implications for existing as well as new operators - the start-up price is more than six times the present cost of Rs1,658 crore.

Most of the telecom companies, including Bharti Airtel, Vodafone Essar, Idea, and state-owned Bharatiya Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, hold extra spectrum beyond 6.2 Mhz, and the new norms would put a huge financial burden on them.