Vodafone offers Rs. 4,000 crore for retaining 2G spectrum in three circles

Vodafone India has offered to pay Rs. 4,000 crore for retaining premium 2G spectrum in three metros Delhi, Mumbai and Kolkata, where its licences will expire in 2014.

Vodafone, the nation's second largest telecom operator, on June 18 wrote to the Telecom Secretary offering to pay Rs. 4,000 crore for extension of its licence beyond November 2014.

"For extension of our licence for 20 years, along with current mix of spectrum and flat spectrum usage charge of 3 percent AGR (Ajusted Gross Revenue), we are willing to pay Rs. 4,000 crore," it wrote.

The government, however, has plans to auction spectrum in the three circles in the forthcoming round scheduled later this fiscal.

Vodafone had previously approached the court against the government plan to auction spectrum held by it. It had sought extension of the licences, which was rejected by DoT.

DoT is learnt to have presented Vodafone's proposal before Empowered Group of Ministers, headed by Finance Minister P Chidambaram, when it met on June 26.

The EGoM has referred matter of spectrum pricing back to Telecom Regulatory Authority of India for fresh recommendation for third round of spectrum auction.

The government plans to auction 900 Mhz spectrum held by Vodafone in Delhi, Mumbai and Kolkata. It is considered to be more efficient than the 1800 Mhz band that was put for auction on November 2012.

Vodafone has approached DoT to pay Rs. 1,700 crore each for its 900 Mhz spectrum in Delhi and Mumbai, and Rs. 600 crore for airwaves it holds in Kolkata service area.

As per last price fixed by government, Vodafone would be required to pay at over Rs. 13,000 crore to retain the quantum of spectrum its holds in 900 Mhz band in these three circles, excluding annual spectrum usage charges for which the company has proposed flat rate of 3 percent.

Government had fixed price of 900 Mhz at double the price of spectrum in 1800 Mhz band, while the company has offered price based on recommendation made by sector regulator Trai for CDMA spectrum which 1.3 times the price of 1800 Mhz band.

While government could determine market rate for 1800 Mhz band in Kolkata in November 2012 auction, it is yet to discover market price for the radiowaves in this band for Delhi and Mumbai.

There were no bids received for the radiowaves in Delhi and Mumbai neither in November 2012 nor in March 2013 auctions.