Govt, telcos differ on price to set one-time excess spectrum fee

Written by fe Bureau | New Delhi | Updated: Feb 10 2014, 19:44pm hrs
Spectrum auctionThe new fight between the government and the operators is likely to emerge on whether the new auction prices will apply. Reuters
After coming together for a successful auction of spectrum, the government and mobile operators may once again have a falling out, this time over payment of a one-time charge for holding excess spectrum (above 4.4 and 6.2 MHz).

Though the government had raised a demand of Rs 23,000 crore on operators like Bharti Airtel, Vodafone, Idea Cellular, Reliance Communications, Aircel, BSNL and MTNL in January 2013, all the private operators have obtained orders from different high courts staying the payment of the amount. The matter is still sub judice.

The new fight between the government and the operators is likely to emerge on whether the new auction prices will apply while calculating the price or the reserve price of the March 2013 auction.

The problem would emerge while calculating the prices for circles like Delhi, Mumbai, Karnataka and Rajasthan, where no bids were received in November 2012 auction.

For the remaining 18 circles, the amount was calculated based on the auction prices of the November 2012 auction. For the remaining four circles, the reserve price of the March 2013 auction was applied. Now that a market-determined price has surfaced, ideally the government should apply that, an executive from a private telecom service provider said.

Though the price in the ongoing auction has gone quite high in circles like Delhi and Mumbai for the 900 MHz band and even for the 1800 MHz band in circles like Assam, Bihar, West Bengal and West UP, they are still lower than the reserve price fixed in the March 2013 auction that did not see any participation (see table).

For instance, if the bid prices of February 8 are taken into account, they were lower in the four circles for 900 and 1800 MHz and thus the outgo of Bharti Airtel and Vodafone would come down by around Rs 500 crore each. The amount would be somewhat less for Idea Cellular.

Approximately, the governments demand would get lowered by around Rs 1,500 crore if one goes by the February 8 price, an executive from a telecom firm said.

The executive, however, said that they maintain their stand that the one-time charge is illegal and would fight that out in the courts.

However, a department of telecommunications official said that since the decision was finalised in January 2013 and demand notices sent, it would stand by it. The decision taken then would not be reopened. The operators would have to pay what was raised on them then based on the auction-determined prices of the November 2012 auction and provisional reserve price for the remaining four circles, the official said.

The due amount was the highest on the state-owned BSNL at around Rs. 6,912 crore, followed by Bharti Airtel (Rs 5,201 crore), Vodafone (Rs 3,599 crore), MTNL (Rs 3,205 crore), Idea (Rs 2,113 crore), Aircel (Rs 1,365 crore), Loop Mobile (Rs 606 crore) and Reliance Communications (Rs 173 crore).

Initially, mobile operators were given 4.4 MHz spectrum along with licence for Rs 1,651 crore for pan-India operations and later they were entitled to get another 1.8 MHz on fulfilment of certain subscriber-base criteria.

In November 2012, the government decided that the operators should pay for holding spectrum above 6.2 MHz retrospectively, from July 2008 to January 1, 2013.

After that, for spectrum above 4.4 MHz, they would have to pay for the remaining period of their licences based on auction held in November 2012.