Wednesday, June 15, 2016

Government to lower spectrum fee for telecom auctions
Photo: The Telegraph
NEW DELHI: The NDA government on Tuesday signaled a shift to lower levies on airwaves used by mobile companies with a panel of top officers recommending 3% spectrum usage charge (SUC) for the upcoming auctions, where the Centre can hope to raise up to Rs.5.5 lakh crore if all the radio waves on offer find takers.

A lower SUC can, in the long run, reduce your mobile bill besides ushering in transparency in the determination of revenues declared by mobile operators such as Reliance Jio and Bharti Airtel.

Photo: The Hindu Business Line
TOI was the first to report on the 3% SUC in its edition dated April 4. Currently, the levy ranges between 1% in the 2,300MHz frequency band and 3-8% for other bands. There was a fear that companies holding spectrum in the 2,300MHz frequency will attribute most of their revenues from the lower-duty band, thus paying the government lower charges. Airtel and soon-to-be-launched Reliance Jio Infocomm hold spectrum in this frequency.

The inter-ministerial telecom commission recommended a weighted average formula for the computation of the SUC for mobile operators, which would mean that they will have to pay charges in line with their spectrum holdings across the various bands.
The panel had earlier recommended that SUC be fixed at a flat 4.5% for all the bands, but the move was rejected by the attorney general who said that the 1% charge on the 2,300MHz band cannot be altered now as there is no provision to make the changes. "The weighted average formula will bring in transparency in the system," a senior official said after the telecom commission's meeting.

The government fetches around Rs 7,000 crore from the SUC annually, and the official said that the measure will be "revenue-neutral". "The obligation of a telco towards SUC cannot go down to what it had paid last year, in case the revenues don't decline," the source said.

For Airtel, the SUC charges are expected to come down to 3.74% from the existing 4.9%, while for Reliance Jio, the actual charge is expected at 2.88%, the official said.

The telecom ministry will approach the Union Cabinet on the issue in the next two-three days, while the notice inviting application (NIA) for the spectrum auctions is expected to be announced over the next fortnight, the source said. "If everything goes as planned, the auctions will be held in July."

The sale will see the auction in the highly-efficient 700MHz band for the first time ever where airwaves will be sold across 22 telecom circles. Also on the block will be airwaves in the bands of 800MHz, 900MHz, 1,800MHz, 2,100MHz, 2,300MHz and 2,500MHz.

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