Dual-technology telecom operators could be contemplating returning their excess spectrum beyond 2.5 MHz, as the market has clearly moved towards GSM technology, and, paying a hefty price tag for both this and CDMA might not be viable. These operators have spectrum up to 4.4 MHz in GSM, as well as in the CDMA space, under the same licence.
Says the top executive of a dual technology company: “It’s an option we will surely look at, as the price is too high and most of it is being used for data services. We don’t need so much.”
Analysts say having up to 2.5 MHz spectrum is enough to run an operator’s data business model (as MTS has been doing) and shifting voice customers to own GSM network. It would also release cash to bid for more spectrum at the coming auctions.
Incidentally, the Supreme Court is hearing a case filed by GSM operators, which have said dual technology is illegal and these licences should be scrapped.
The government has cleared a proposal under which operators can surrender additional spectrum if they they wish to. Tata Teleservices, for instance, has excess spectrum beyond 2.5 MHz in 11 of the 22 telecom circles, in seven up to 3.75 MHz and in four up to 5 MHz. Reliance Communications has excess spectrum in 18 of the 22 circles; up to 5 MHz in 12 circles and in the remaining up to 3.75 MHz. The two companies together have to fork out over Rs 7,000 crore, based on the fact that their base price for CDMA spectrum is 1.3 times higher than that of the GSM price of Rs 2,800 crore per MHz.
The two companies got their CDMA licence much later than most incumbent GSM operators and also have to fork out more as they have more years of their licence left, compared to their GSM competitors. The Tata licences, for instance, come for renewal between 2017 to 2024.
