Bharti Airtel, Vodafone and Idea Cellular in a letter Finance Minister Pranab Mukherjee sought his personal intervention requesting him to ensure that no further decision on re-farming 900 Mhz is taken, at the very least until, a thorough consultation is carried out.
Sectoral 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.
The three companies said Trai “hastily” concluded that re-farming should be carried out when the many licences of these companies expire in 2014-16. The companies argue this amounts to misinterpretation of the SC order in February, which cancelled all 122 telecom licences allotted in and after 2008 and ordered a re-auction of the spectrum. “We submit that re-farming has no nexus with the Supreme Court order,” the three CEO’s said in the letter.
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.
A report from research firm Analysis Mason said that the operators using 900 Mhz spectrum will need to replace 2,86,590 base stations and install an additional 171,954 base stations to provide equivalent coverage using 1800 Mhz spectrum. If the incremental investment incurred due to re-farming is passed on to the customers then tariffs would increase by 34 paise a minute, the report commissioned by the incumbent GSM operators said.
If the re-farming cost is not passed on to the consumers then operators' EBITDA margins will decline by 8 per cent, it said. “The report concludes that a decision having wide and serious ramifications as re-farming needs a proper consultation with the industry which unfortunately, despite having been promised by TRAI, has not been carried out,” the CEOs stated in their joint letter.
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)".