Spectrum charges could go up steeply

Written by Anandita Singh Mankotia | Rishi Raj | New Delhi, Feb 25 | Updated: Feb 26 2008, 06:25am hrs
Mobile operators may get a hard knock from the Budget. Officials say the finance ministry has proposed a steep hike in the annual spectrum charges the operators pay. They say the current spectrum usage charges, varying from 2-6% of the adjusted gross revenue (AGR) for spectrum held between 4.4 Mhz and 15 Mhz, will be replaced by circle-based charges. This will have three slabs: 8% for metro and category A circles; 6% for category B circles; and 4% for category C circles.

The new charges, if slapped, will double the average payout of the industry to 5% of AGR from 2.6% now. Operators now pay around Rs 2,800 crore a year towards spectrum charges. This figure could go up to around Rs 6,000 crore under new slabs.

The department of economic affairs (DEA) has asked the department of telecommunications (DoT) to work out the detailed revenue implications of the proposal and submit a report.

The proposed spectrum charges are more in line with what operators pay as annual licence fee, which is 10% of AGR for metros and category A circles, 8% for category B circles and 6% for category C circles.

By the current spectrum usage charges, operators in a metro circle like Delhi and Mumbai pay 2% of their AGR for spectrum up to 4.4 Mhz, 3% for 6.2 Mhz, 4% for 8-10 Mhz, 5% for 12.5 and 6% for 15 Mhz. If the new proposal is accepted, operators would have to pay, for circles like Delhi and Mumbai, spectrum usage charge at 8% of their AGR irrespective of the level of spectrum they hold.

For instance, in Delhi and Mumbai, Bharti Airtel, which has 10 Mhz spectrum for each city, would end up paying 8% of its AGR as spectrum usage charge, while Reliance Communications, which has been allotted 4.4 Mhz, would pay at the same rate.