Five days before the Telecom Commission is scheduled to meet on December 31 to discuss the spectrum usage charge (SUC) that telecom operators are required to pay, top telecom companies have written to the PMO seeking a flat SUC before the upcoming auction in January.
Top executives of Bharti Airtel, Vodafone India, Idea Cellular and Telewings have also urged the government to apply a uniform SUC to all technologies, in case a flat SUC is not immediately possible. The letter has also been sent to the Trai chairman, chairman of telecom commission and all members of the Empowered Group of Ministers (EgoM).
“We believe policymakers should disentangle this web of opacity with clarity, speed and courage. Exercising the right choice will restore investor confidence, have a far reaching impact on other sectors of the economy and result in a vibrant auction,” the letter says.
Previously, Trai had recommended a uniform SUC at 3%, but this was opposed by the DoT committee. Operators currently pay between 1% and 8% of their revenue as SUC depending on the quantum of spectrum they hold. “The present SUC policy is creating a ‘non-level playing field’ between the operators deploying the same technology. For a customer, a mobile broadband 4G BWA technology is expected to be similarly priced in a competitive market. How can an operator offering the same technology recover an additional burden of 5%-7% spectrum charges?” the letter asks.
Another negative outcome of continuing escalating SUC is that it’ll affect all other telecom policy initiatives of the government, including M&A, spectrum trading, etc. Because of this single issue, the dire need for consolidation to improve the precarious financial health of the industry will be irretrievably compromised.
“Even taking today’s reserve prices, as per NIA payment terms, the loss to the government exchequer on account of this unsold spectrum is around R4,900 crore upfront and about 1,960 crore per year, a figure far higher than the annual loss of R250 crore on account of flat SUC, estimated by the department,” the companies have written.