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Help Vodafone hits at spectrum price plan

Vodafone and India’s Bharti have criticised a proposal by the country’s telecoms regulator to increase the price of mobile spectrum, saying it discriminates against older operators.

The Telecom Regulatory Authority of India has recommended a steep increase in the prices of second-generation spectrum that would also see companies holding more than a 6.2 megahertz spectrum paying a one-off fee for the extra bandwidth.

Trai’s proposals to the government come in the wake of a telecoms scandal that has shaken India’s political system, involving the allocation below market prices of 2G licences and spectrum in 2008.

A report by India’s national auditor has concluded that the country’s telecoms ministry had sold off its 2G spectrum at a “throwaway price”, on a “first come, first served basis”.

It said this has cost the exchequer up to $39bn in lost revenue.

Vodafone Essar, the Indian joint venture of the UK’s Vodafone, has come out strongly against the regulator, claiming that its potential one-time pay-out would be Rs17.43bn ($382m).

“Vodafone Essar strongly disagrees with Trai’s new set of recommendations, which are flawed, illogical and discriminatory against the operators who were the first to invest deeply to build the sector,” said India’s second-largest operator by revenues.

Bharti Airtel, India’s biggest operator, which would have to pay Rs40bn under the move, said: “The recommendations by Trai go against the stated principle of the government to offer affordability, fairness and a level playing field.”

Reliance Communications, which is controlled by the Indian billionaire Anil Ambani, could pay up to Rs700m, according to the operators.

While this new pricing mechanism has been suggested by the regulator, it will be the telecoms ministry that makes the final decision. That decision will be taken this year.

Analysts warn that a decision to charge Indian operators could have an adverse impact on one of the country’s most successful industries.

Vodafone’s Indian adventure has been soured by a series of legal battles, including a long-standing dispute with the country’s tax authorities over its $11bn acquisition of Hutchison Essar.

It could face a bill of up to $2.5bn in back taxes.

A further blow could lead it to reconsider its Indian venture, according to several analysts. “Vodafone is tired of being at the centre of controversies,” an analyst with a foreign bank told the Financial Times earlier this year.
Airtel Digital HD Recorder / Kerala Vision Digital TV
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