DoT recalculating one-time spectrum fee, telcos may gain

Written by PTI | Updated: Apr 21 2014, 05:11am hrs
Old telecom operators are likely to get some relief in one-time spectrum charges, estimated at R23,197 crore at present, with the DoT recalculating rates afresh based on the February auction price.

"There will be a revision in rates of four circles Delhi, Mumbai, Karnataka and Rajasthan for 1,800 Mhz, and in three metros where auctions for the 900 Mhz band were held in February. The rest will remain the same," a DoT official said.

"The process has started. I cannot share the exact time when the notice will be sent, but possibly within a month," the official said.

The one spectrum fee is the charge operators were asked to pay for holding additional spectrum. In 2008, telecom firms were given 4.4 MHz spectrum, along with a licence, for R1,658 crore for pan-India operations. Most of the operators were allocated additional spectrum without sharing upfront charges.

The government in 2012 had decided that operators should pay for holding spectrum above 6.2 MHz retrospectively, from July 2008 to January 1, 2013, based on the market-determined price.

The DoT had raised a total demand of R23,197 crore from telecom operators, who were issue licences in 2008 (old telecom operators). The amount was arrived at on the basis of the floor price fixed for the November 2012 auctions. The bid got a tepid response as the base price was considered high.

As per this calculation, state-owned BSNL had to pay around R6,912 crore, Bharti Airtel R5,201 crore, Vodafone R3,599 crore, MTNL R3,205 crore, Idea Cellular R2,113 crore, Aircel R1,365 crore, Loop Mobile R606 crore and Reliance Communications

R173 crore.

No bids were received for 1,800 Mhz, widely known as 2G spectrum, in Delhi, Mumbai, Karnataka and Rajasthan in the 2012 auctions, but the demand for one-time spectrum charges was raised based on base price.

The final 2G spectrum price in the 2012 auctions, despite aggressive bidding, was about 34% lower in Delhi, 50% lower in Mumbai, 41% lower in Karnataka and 51% lower in Rajasthan

compared to the base price for the 2012 auctions.

Therefore, if prices were to be revised under the 2013 auction price, operators would get a discount of up to 51% for the Rajasthan circle, 25% for the Mumbai service area and 34% for Delhi in the 1,800 Mhz.

Similarly, the final bidding price in 2013 for 900 Mhz spectrum, considered two times more efficient than 2G spectrum, was about 5% lower in Delhi and 26% lower in Mumbai compared to the base price for the 2013 auctions.

In Kolkata, the price of the 900 Mhz band was about 7% higher than the base price for the 2012 auctions.

Telecom operators have challenged the government decision to levy a one-time spectrum fee. The matter is sub judice.