Spectrum shift to put additional Rs.10,000 crore cost on Vodafone

New Delhi, April 30 (IANS) Vodafone India Monday said the telecom regulator's proposal to replace its 900MHz with an 1800MHz network will cost an additional Rs.10,000 crore to the firm which will be passed on to consumers.

The Telecom Regulatory Authority of India (TRAI) has recommended refarming -- redistribution of airwaves in the 900 MHz largely held by incumbents and substituting it with frequencies in the 1800 MHz band -- when licences of mobile phone companies come up for renewal beginning 2014.

"Apart from the write-off of existing investments, it will cost around Rs.10,000 crore to replace 900MHz with a 1800MHz network," Vodafone said in a letter to Communications Minister Kapil Sibal.

"The investment to replace the existing 900MHz network will mean added cost burden for the operator which will translate into higher tariffs for consumers," it added.

The firm said the amount could have been better utilised to expand network into new geographies.

"We estimate that if this expenditure were redirected to investment in our network then we could provide coverage to around 50,000 additional villages. This is a much better use of our capital and a massive lost opportunity for the country."

Vodafone suggested the government should ask the regulator to carry out a thorough study of the issues involved in re-farming in consultation with the stakeholders.

Vodafone has 10 circles coming up for licence extension in 2014 and 2015. These circles represent around 65 percent of Vodafone India's total mobile subscriber base of 150 million and contribute 65-70 percent of Vodafone's total rural subscriber base of 60 million.

The firm has start-up spectrum in the 900MHz band in each of these circles. This spectrum forms the foundation of the networks deployed.

The total investment in the network in these 10 circles to date is around Rs.16,700 crore.

Referring to the policy and licence provisions with respect to extension of licence, Vodafone has also said that an extension of license without the extension of the spectrum allocations which are intrinsic to the license would be a "meaningless exercise".

"This would also be against the very concept of 'continuity' that is enshrined in the policy as well as the licence."

It has also said that extension of licences with a different type and quantum of spectrum was legally flawed and said that the mobile permits were already technology neutral.

"Our licences are already technology neutral the government has allowed us to deploy any technology in our allocated spectrum."