Re-farming of spectrum will harm incumbents: Assocham

New Delhi, May 19 (IANS) The telecom regulator's proposal for an immediate re-farming of spectrum will adversely affect the profits of established service providers, an industry lobby said Saturday.

Telecom Regulatory Authority of India (TRAI) has recommended re-farming of the entire 800/900 MHz holding at the earliest before the first set of licenses come up for renewal in 2014.

Re-farming refers to redistribution of airwaves in the 900-MHz band largely held by incumbents and substituting it with frequencies in the 1,800-MHz band.

"The proposed immediate re-farming of spectrum would be detrimental for incumbents like Bharti Airtel, Idea Cellular, Vodafone, MTNl/BSNl, Reliance Communications and Tata Teleservices who have considerable share of spectrum in the 900/800 MHz category," Assocham (Associated Chambers of Commerce and Industry) said in a letter to Prime Minister Manmohan Singh and Communications Minister Kapil Sibal.

"The re-farming is likely to impact profitability owing to an increase in network operating expenditure. It would lead to significant cash outflow due to amount payable for the spectrum at auction discovered price and cost of additional capex and opex for re-alignment of spectrum," it added.

Assocham also said that the operators whose licenses have been cancelled and who have to re-bid may not be able to put together a viable business case with recommended reserve price for spectrum.

The TRAI has recommended a reserve price of Rs.3,622 crore for 1 MHz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under then telecom minister A. Raja.

The recommendation came in the wake of the Feb 2 Supreme Court order cancelling 122 telecom licences issued in 2008.