Big relief for telecom operators ahead of spectrum auction

The spectrum usage charge or fees is levied by the government on all telecom operators, where by the operators pay around 4-8 percent annually on the amount of spectrum.

Published: 28th September 2016 09:44 PM  |   Last Updated: 28th September 2016 09:44 PM   |  A+A-

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(File photo: Reuters)

NEW DELHI: At a time when the entire telecom sector is grappling with huge debt of around Rs 3.8 lakh crore, the department of telecom has decided to provide a big relief to operators as it prepares itself for the biggest-ever spectrum auction scheduled to commence from October 1.

The department has decided to bring in a major change in policy for which spectrum usage charge (SUC) are collected from operators and has decided to put a flat rate of 3 percent uniform for all operators replacing it with the current practice of weighted average method.

The spectrum usage charge or fees is levied by the government on all telecom operators, where by the operators pay around 4-8 percent annually on the amount of spectrum they hold.

“The flat rate of 3 percent will help the operators to reduce their annual operating cost. Moreover, after this mega auction, the government is not planning to hold any further auctions in near future,” said sources in the telecom department.

The government expects to garner around Rs 5.6 lakh crore from the upcoming mega auctions as it has kept the highest reserve price. The government intends to allocate the spectrum to winners of the auction within a month.

A recent study cited by Cellular Operators Association of India (COAI), the reduction in spectrum usage charges (SUC) by 1 percent can increase GDP by Rs 1.76 lakh crore.

A joint study by KPMG and Assocham, spectrum usage charges (SUC) in India are comparatively higher than other economies. It further added that the telecom sector is expected to contribute 8.2 percent or Rs14 lakh crore to the GDP by 2020 and one of the highest contributors to the GDP over the last decade.

Last year, the government garnered nearly Rs 1.1 lakh crore from the sale of various spectrums. Also, the finance ministry in the budget pegged the revenue at Rs 98,995 crore from the telecom space, which includes Rs 64,000 crore from the auction of about 2,354.55 Mhz of spectrum and the rest from various levies and services in FY17.

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