Reallocation of all 900 MHz spectrum recommended

by Oct 17, 2012

NEW DELHI (Reuters) - The Telecom Commission has recommended that mobile phone carriers give up all their airwave holding in the superior 900 mega hertz band at the time of their permit renewals, a widely opposed move by the industry that it says will cost about $24 billion more in capital outlay.

The Telecom Commission's recommendations will have to be approved by a ministerial panel before they are implemented, telecoms secretary R. Chandrashekhar, who also chairs the commission, said on Wednesday.

Market leaders Bharti Airtel Ltd and Vodafone's (VOD.L) 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.

This would mean the carriers will have to buy the replacement airwaves in an auction, and also have to build more mobile masts and replace some of the existing gears to continue services.

The spectrum switch will force operators to write off a total $4.7 billion of assets, as some of their existing equipment becomes obsolete, the Cellular Operators Association of India (COAI) said in May.

Telecoms stocks barely moved, with analysts saying that the market has already priced in the potential cost after the sector regulator's proposals earlier this year.

By 11:45 a.m., Bharti Airtel shares were up 0.8 percent, while Idea Cellular Ltd gained 0.4 percent in a Mumbai market that was little changed.

(Reporting by Devidutta Tripathy; Editing by Anand Basu)

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