Telcos to save Rs 5k cr/year with zero spectrum levy

The SUC rate for Bharti will come down to 0.39% from 4.26%.

airtel, Jio
Beneficial for consumers as investment in networks to rise (Image PTI)

Telecom operators Bharti Airtel, Reliance Jio and Vodafone Idea will collectively make annual savings of Rs 4,934 crore this fiscal onwards on account of a lower spectrum usage charge (SUC). Under the new policy announced by the government in September 2021, spectrum acquired in the recently-concluded auction and even future ones will not attract any usage charge.

According to analysts, apart from being beneficial for the operators, who have been able to bring down their spectrum outflow cost, the move will also be good for consumers as the former will have more cash in hand for investments in networks. Further, it will be in the interest of the operators to buy more spectrum in future auctions.

At Rs 2,216 crore, Bharti Airtel will save the most, followed by Jio at Rs 2,078 crore and Vodafone Idea at Rs 640 crore.

The SUC rate for Bharti will come down to 0.39% from 4.26%. For Jio, it will come down to 0.19% from 2.9%, and for Vodafone Idea, it will be 0.66% from 3%.

While the methodology of calculating SUC remains the same as before, the department of telecommunications has removed the 3% floor rate on SUC. This ensures that as and when operators acquire more spectrum in future auctions, their SUC will become zero on their entire spectrum holding over a period of time.

The SUC regime has changed over the past decade. For instance, on spectrum acquired till 2013, SUC ranged between 3 and 8% of operators’ adjusted gross revenue depending on the spectrum band and amount of spectrum held. From 2014, the government moved to a uniform SUC regime independent of bands and amount of spectrum held. While SUC was set at 5% in 2014 and 2015 auctions, it was lowered to 3% in 2016 and 2021 auctions. This has been brought down further to 0% from 2022.

In the recently-concluded 5G spectrum auctions, the government mopped up Rs 1.5 trillion. Jio acquired the highest quantum of spectrum at 24,740 MHz across bands for `88,078 crore. Bharti bought 19,867 MHz for `43,084 crore and Vodafone Idea bought 6,228 MHz for Rs 18,799 crore.

Since operators have the option of paying the entire amount committed over a 20-year period spread into equal installments, the government will get Rs 13,365 crore as first year’s installment. This means, Jio’s annual installment will come to around Rs 7,876.41 crore, Bharti’s Rs 3,852.80 crore and Vodafone Idea’s at Rs 1,681.12 crore.

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