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Govt panel approves partial refarming of 2G spectrum

An Empowered Group of Ministers (EGoM) said mobile phone carriers will have to give up their airwave holdings beyond 2.5 mega hertz of spectrum in the superior 900 mega hertz band at the time of their permit renewals. The operators who hold upto 2.5 spectrum will have to pay the auction determined price for holding on to the spectrum.

The EGoM, headed by Kapil Sibal, also recommended that regarding merger and acquisition (M&A) norms in the sector, the acquirer will have to pay the auction determined price for the spectrum held by the company being acquired.

Market leaders Bharti Airtel  and Vodafone's  India unit -- two of the country's oldest carriers -- will be hit the most by the proposed refarming or substituting of their more efficient 900 MHz band airwaves with inferior quality 1800 Mhz band airwaves starting in November 2014.

However, the plan to allow them to retain some of the spectrum may give carriers some relief, compared with an earlier proposal to replace all their holdings.

The Telecom Commission presented its response on the contentious issue spectrum refarming issue to the EGoM today.

The EGoM, headed by Finance Minister P. Chidambaram, includes External Affairs Minister Salman Khurshid, Information and Broadcasting Minister Manish Tewari and Law Minister Ashwani Kumar.

Telecom Regulatory Authority of India (TRAI) Chairman Rahul Khullar met Telecom Secretary R Chandrasekhar yesterday to discuss the issue, PTI reported.

Both officials declined to comment on the content of their meeting.

The GSM industry is opposed to refarming or substitution of their 900 MHz airwares with inferior quality 1800 MHz band spectrum saying it will cost the sector more than Rs. 1,00,000 crore in buying replacement airwaves in an auction and also building more mobile masts and replacing some of the existing gears to continue services.

“The Telecom Commission’s recommendation for refarming the entire spectrum in the 900 MHz band is discriminatory against GSM (Global System for Mobile Communications) players, and will have “wide-scale ramifications on the customers, technology, operators, investors, competition and the society at large”, industry body Cellular Operators Association of India (COAI) said in a release titled ‘Full Refarming of 900 MHz: Perfect Recipe for Economic Havoc’ earlier.

Quoting an independent study, the COAI said the refarming will lead to call charges going up by 64 paise per minute.

Ahead of the EGoM's decision, Bharti Airtel shares gained 4.41 per cent to close at Rs 280.85 on the Bombay Stock Exchange (BSE).

Shares of Idea Cellular closed on the BSE with a gain of 0.29 per cent at Rs 85.50.

With inputs from PTI