Telecos told to pay one-time fee for extra spectrum

Decision will impact Idea Cellular, Reliance and Tata Teleservices Ltd

Aiming to garner around Rs 31,000 crore, the Union Cabinet on Thursday approved imposition of one-time fee on extra spectrum held by old telecom companies, Airtel and Vodafone.

Though the decision will directly hit the old telecom operators, it will also impact others like Idea Cellular, Reliance Communications and Tata Teleservices Ltd. The two state-run companies, BSNL and MTNL also holding extra spectrum, have requested the government for a waive off.

However, Telecom Minister Kapil Sibal dismissed apprehensions of an increase in tariff due to this decision.

Sibal told reporters, the Cabinet has accepted the Empowered Group of Ministers recommendations that mobile phone companies be charged a one-time fee for the excess spectrum they own beyond a cap set by the country’s telecom regulator. “Spectrum will be charged for holdings beyond 4.4 MHz in GSM on auction determined price. For GSM above 6.2 (Mhz), one-time charge will be levied from July 2008 onwards,” he said.

Auction-determined price 

The ministerial panel had earlier suggested that GSM-based telecom operators be asked to pay for airwaves they hold beyond 4.4 MHz at an auction-determined price, while CDMA carriers to pay for holdings beyond 2.5 MHz for the remaining validity of their permits. Sibal said that operators will have to pay two set of charges. “Prior to January 1, one price and after January 1, auction determined price will be levied (for rest of the licence period).”

The minister said while the price discovered in the auction beginning November 12 will apply for the one-time fee to be charged from incumbent GSM operators, the Department of Telecom (DoT) will work out the basis for the same for CDMA carriers because there are no bidders for the CDMA auction.

It may be noted that telecom operators were earlier given licence for Rs 1,658 crore, which also included initial allocation of 4.4 Mhz spectrum and promise of additional 1.8 Mhz spectrum, a total of 6.2 Mhz spectrum, after acquiring certain number of customers.

GSM operators holding more than 6.2 MHz of spectrum will pay a retroactive fee for the airwaves from July 2008 till end of the year. The price would be the 2001 entry fee duly indexed using State Bank of India Prime Lending Rate divided by 6.2. He added that telecom operators will be given an option to surrender spectrum beyond 4.4 Mhz in GSM.

On the exemption sought by BSNL and MTNL, the government will take up the issue separately, Sibal said.

The government approved a proposal to grant Tata Teleservices 4.4 Mhz of airwaves in Delhi zone after the completion of the auction.

The government also approved a proposal that companies buying a carrier that paid a low state-set price for airwaves must match a price to be determined at an upcoming auction and pay the difference to the government.

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