The department of telecommunications (DoT) has shifted into damage control mode following charges that communications & IT minister A Raja favoured new players by under-pricing licences granted to them bundled with 2G spectrum.
DoT is now working on a curious proposal to make them pay extra for the spectrum. According to officials, the one-time charge that DoT proposes to levy on existing players like Bharti Airtel, Vodafone Essar and Idea Cellular for holding spectrum beyond the guaranteed 6.2 MHz would also be applicable to new players just for their 4.4 MHz start-up spectrum.
If indeed this proposal does pass muster, new players like Swan, Unitech, Datacom, S Tel and Loop Telecom would end up forking out an additional Rs 1,500-2,000 crore, virtually doubling their licence fee. Unitech paid Rs 1,651 crore for its licence to operate in 22 circles, while Swan paid Rs 1,537 crore for 13 circles. Officials said such an exercise would be a perfect balancing act.
DoT allotted several existing operators spectrum beyond the 6.2 MHz guaranteed under their licences in various circles through administrative notification. Now it wants to make them pay for it, but a formula is still to be worked out. The telecom commission discussed the matter on November 11, but deferred a final decision by a fortnight.
According to one formula being deliberated upon, the spectrum charge beyond 6.2 MHz would be Rs 80 crore per MHz for category A and metro circles, Rs 40 crore for category B and Rs 15 crore for category C circles. If this were accepted, then new licensees would also be charged along the same lines.
Since the new players were given licences and spectrum at a price discovered in 2001, and Swan and Unitech subsequently sold stakes at several multiples of their licence fee, Raja faces charges that he helped these companies benefit at the cost of the national exchequer.
Though Raja has stoutly defended his actions, he has sought to make changes in the licence conditions to prohibit the fledgling licensees from making unearned gains. On November 11, for instance, the telecom commission recommended a proposal to bar promoters of the new companies from selling their stake for a period of three years. The proposal under consideration also seeks to make new players pay an additional amount for their spectrum so that everything is seen as fair.
However, there is one problem that DoT could encounter. Since the licence condition mandates 4.4 MHz spectrum bundled with the licence, new operators could challenge any extra levy in court. Nevertheless, DoT officials maintain that as a licensor it has the power to amend the terms and conditions of the licence agreement at any time.
