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TMCNet:  Telcos with extra spectrum to pay govt Rs 25,000 crore [Telecom] [Times of India]

[November 09, 2012]

Telcos with extra spectrum to pay govt Rs 25,000 crore [Telecom] [Times of India]

(Times of India Via Acquire Media NewsEdge) NEW DELHI: The government on Thursday decided to get mobile operators to pay for extra spectrum held by them, a move that will make the cash-strapped exchequer richer by over Rs 25,000 crore, although industry players warned of a possible increase in call tariffs.


The decision is expected to hit Bharti Airtel and Vodafone the most. Other players, including Idea Cellular, Reliance Communications, MTNL and Tata Teleservices, will also be affected.

An official statement said the government would charge for all spectrum beyond 4.4 mega hertz held by telecom companies once auction prices are available. The "prospective" levy is expected to come into effect from the January-March quarter.

Separately, operators holding over 6.2MHz airwaves would have to pay for it from July 2008. Here the levy will have two elements. For 2008 to December 2012, the Centre will use the 2001 price of Rs 1,658 crore as the benchmark and adjust it for inflation. From January, the auction-determined price will be used.

"The one-time charge decision is expected to impact the industry with an additional financial burden of Rs 30,000 crore (approximately), which eventually, will be passed on to the consumers in the form of increased prices for their services," the Cellular Operators Association of India, the lobby group representing GSM players said in a statement. The government on Thursday postponed a decision on how to deal with excess spectrum (over 2.5Mhz) with CDMA players.

According to telecom department estimates, if the spectrum is sold at a minimum price fixed by it, then the government will get Rs 30,927 crore from one-time fee. This estimate included around Rs 5,900 crore from CDMA players having spectrum beyond 2.5Mhz.

Separately, Bharti Airtel CEO Sanjay Kapoor said that the tariffs need to be increased as marginal costs were not covered. Next year, the burden is going to increase further as the companies would have to pay for spectrum at market-determined prices when their licences come up for renewal.

For the moment, the government has focused on excess spectrum and Thursday's cabinet decision was in line with recommendations of a ministerial panel headed by finance minister P Chidambaram.

Telecom minister Kapil Sibal hoped his ministry's calculations of garnering about Rs 31,000 crore from the surcharge would be met.

(c) 2012 Bennett, Coleman & Company Limited

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