NEW DELHI: In relief to telecom service providers (TSPs), the Department of Telecommunication (DoT) on Wednesday announced the removal of the 3% floor rate on SUC (spectrum usage charges).
The move of the government is going to benefit telcos as it would reduce their future outflows towards these statutory fees. “For spectrum acquired through an auction held after 15 September 2021 in different Access spectrum bands, no SUC shall be charged,” said DoT in an order. “The weighted average is to be derived by the sum of the product of spectrum holdings and applicable SUC rate, divided by total spectrum holding. The weighted average rate should be determined operator-wise for each service area,” reads the DoT order.
In 2016, the government implanted the rule of three per cent SUC to ensure that the revenues for the centre are protected. In the same year, the SUC for the telcos had been lowered. The move was welcomed by telecom operators, and they said the order will provide clarity to telecom service providers for the upcoming auctions.
“We welcome and thank the government for the much-awaited DoT order regarding the levy of SUC charges for spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz 2500 MHz, 3300 MHz and 26 GHz bands. The order will provide clarity to telecom service providers for the upcoming auctions,” said S P Kochhar, Director General, the Cellular Operators Association of India (COAI). Charu Paliwal, the research analyst at Counterpoint Research, said the decision will be beneficial in easing out cash flow requirements considering the stressed financial health of the sector in India.
“The government’s decision on scrapping of the mandatory requirement of upfront payment, spectrum payment can be made in 20 equal annual instalments and option of surrendering the spectrum after 10 years are steps taken in the right direction. This will be beneficial in easing out cash flow requirements considering the stressed financial health of the telecom sector in India,” said Paliwal.