TRAI's proposal of migration from current spectrum

TRAI is back with its interference in Telecom business! After putting a hell lot of regulations on products, branding, now they want to fiddle with Network!

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 in 2014-16, at a fee discovered through auction.

But the 3 giants (Airtel, Vodafone and Idea) in the industry have jointly written to the finance minister to intervene to ensure that they are not asked to migrate to 1800 Mhz of spectrum. They even mentioned that if that happens, the call rates might go up by 65 paise!

2nd issue is larger frequencies cover less areas which means the operators will have to invest a huge investment required in installing the required BSCs. Acc to 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 (stats from telecomtiger). If this is the case then obviously the rates will have go up. If the re-farming cost is not passed on the customers or in other words, if the tariffs are not increased to the required proportions, then operators' EBITDA margins will decline by 8 per cent.

Lets see what happens!