Winners of 3G wireless spectrum are planning to approach the Union finance ministry with a unique proposal: Allow us to treat the spectrum cost as capital expenditure spread across 20 years.

The licence period for 3G spectrum is 20 years. Treating spectrum cost as capital expenditure will help the companies pay less taxes every year. Seven mobile operators collectively paid a total of Rs 67,719 crore to the government for spectrum auctioned in April.

Industry sources said the operators have the support of the department of telecommunications (DoT) which has written to the ministry of finance to allow spectrum winners to treat the cost of bidding as a capital expenditure.

?Since the government earned much more than the budgeted Rs 35,000 crore from 3G spectrum auctions, it should allow us to treat the cost as capital expenditure, which can be spread over 20 years resulting in lower tax outgo and higher cash flow for us,? an official of a winning mobile operator told FE.

If the government concedes the demand, it would be a first since no similar provision exists for the 2G spectrum. ?Treating 3G spectrum expenditure as capital expenditure would allow the companies to offset the cost annually against the profits and lead to lower tax payouts and higher cash flows. However, treating 3G spectrum expenditure is still a grey area in both the Income Tax Act and the Direct Taxes Code,? Romal Shetty, telecom analyst at KPMG said.

Bharti Airtel paid the highest amount for 3G spectrum: Rs 12,295 crore for 13 circles. Airtel is followed by Vodafone-Essar, which paid Rs 11,618 crore for 9 circles. Reliance Communications paid Rs 8,600 crore for 13 circles and Aircel paid Rs 6,134 crore for 13 circles as well. Tata Teleservices paid Rs 5,864 crore for nine circles while Idea Cellular paid Rs 5,769 crore for 11 circles. S Tel which bagged spectrum in three circles paid Rs 379 crore.

Meanwhile, on Wednesday, the operators welcomed the government?s move to allocate spectrum as committed on September 1. Operators are looking at starting the 3G services launch by the year end. RComm said: ?By releasing the 3G spectrum as promised, the government has paved the way for the next revolution in mobile telecommunications. RComm is fully geared to bring alive this superior 3G experience to all its consumers.?

Tata Teleservices said: ?We are delighted to receive 3G spectrum for commercial use in nine telecom circles. As announced earlier, we have already placed orders for 3G network equipment. We will now closely work with our partners NTT DoCoMo, to put our network and content in place. We look forward to speedy roll out of world-class 3G services which will redefine the telecom experience in India.?