Tata Teleservices has warned that it might have to take legal action against the government if it moves ahead with its plans to ask existing mobile phone companies to pay a price that will be determined in the auction, for the spectrum held by them for the remaining period of their licenses.

The telecom department had circulated a Cabinet note with plans to ask telecom service providers int e country to match the auction-determined price for the spectrum held by them. The move might force the telecom industry to pay as much as Rs 1,20,000 crore and the move will thus face stiff opposition fro the industry players.

The telecom department believes that the proposed plan would allow a fair business environment for all the telecom companies. Tata Teleservices is like to be among the worst affected company as because its mobile permits are valid till 2023-24 whereas that of Bharti Airtel and Vodafone are valid in the period of 2014 to 2016.

"Since the intention is to charge for all spectrum prospectively, those who have the shorter period for renewal would stand to gain differentially as compared to those whose licences were issued later and hence have longer periods for renewal," Tata Teleservices managing director N Srinath wrote to the telecom department.