Trai moots 6-fold hike in start-up 2G spectrum price

In a development that has huge financial implications for existing as well as new operators, the Telecom Regulatory Authority of India has recommended fixing the price for 6.2 Mhz of pan-India start-up 2G spectrum at Rs 10,972.45 crore (Rs 109.724 billion), more than six times the present cost of Rs 1,658 crore (Rs 16.58 billion).

In its recommendations to the Department of Telecom, Trai has also said that every Mhz of additional spectrum (on an all-India basis) beyond the contracted limit of 6.2 Mhz would cost a massive Rs 4,571.87 crore (Rs 45.718 billion).

Most of the telecom firm, including Bharti, Vodafone, Idea and state-owned companies like BSNL and MTNL, hold extra spectrum beyond 6.2 Mhz and the new norms would put a huge financial burden on these telcos.

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In addition, the licences of some of the operators, including Bharti, are due for renewal after completing 20 years periodicity in several circles. Such companies would have to pay to renew their licences as per the new norms recommended by Trai.

When contacted, Trai chairman J S Sarma told PTI, "Yes we have submitted the recommendations to the DoT on the revised norms for 2G spectrum pricing."

According to the report, the spectrum prices for both categories -- up to 6.2 Mhz and beyond 6.2 Mhz -- vary from circle to circle.

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In the category of up to 6.2 Mhz of spectrum, the prices of one Mhz varies from Rs 7.60 crore (Rs 76 million) in the case of Jammu and Kashmir to Rs 187.38 crore (Rs 1.873 billion) in the case of Tamil Nadu.

In the category of beyond 6.2 Mhz of spectrum, the price varies form between Rs 22.89 crore (Rs 228.9 million) per Mhz in Jammu and Kashmir to a maximum of Rs 431.95 crore (Rs 4.319 billion) in Andhra Pradesh.

The revised prices recommended by Trai are effective from April 1, 2010, the report said.