Government asks telcos to pay $105m

Vodafone and Telecom will have to pay the Government $105 million plus gst to renew their rights to spectrum in the 800 megahertz and 900MHz bands, at the same time as making room for a third carrier, under an offer made by the Economic Development Ministry that neither telco is likely to be able to refuse.

The offer appears another step toward clearing the way for NZ Communications to build a third mobile network.

Most of the spectrum used by Vodafone and Telecom to provide mobile phone calls is due to expire by 2012. The ministry's offer would let them each retain about 30MHz of the spectrum for about another 20 years.

This is if they each sell 10MHz to a new mobile network operator by May, which is the deadline for them to accept the offer. If they refuse to sell, the telcos will each forfeit about 15MHz. Vodafone would be billed $56 million and Telecom $49.1 million, but the Government may not get the money till 2011. The price equates to about $3.8 million per megahertz of paired spectrum over the 20 year period. Telecom and Bell South originally paid $36.4 million for the spectrum in the early 1990s.

- © Fairfax NZ News