DoT mulls one spectrum fee of 4%

NEW DELHI: The

department of telecom

(DoT) is considering a single rate for spectrum user charge (SUC) to be paid by mobile operators and this may be capped at around 4% with the ministry looking to do away with the current multiple-layered structure.

The move will benefit big operators such as Bharti Airtel, Vodafone and

Idea

Cellular, but may be a dampener for Mukesh Ambani's Reliance Jio as it may have to shell out substantially higher than the 1% charge that it needs to pay now.

An official source said a single rate will ensure that there is no ambiguity in the determination of spectrum usage charges that operators need to pay. "In a multipleslab regime, it may be difficult to find out what portion of revenue is flowing from what spectrum. There is a scope where an operator may say that it derives the maximum revenue from the spectrum that is charged the least," an industry official said.

"We may go for 4%, or around 5%, which is being looked into," the source said.The current collections from SUC are pegged at Rs 8,000 crore annually.


The government views the proposal as part of the ongoing reforms that it is initiating in the telecom sector at a time when it looks at maximizing collections from future spectrum auctions.

Telecom regulator Trai had proposed a flat 3% spectrum charge in its recommendations made to the department around three years back. The regulator had also suggested that spectrum charges for Broadband Wire less Access (BWA) providers -- such as Reliance Jio -- should be kept at par with other telecom players. Charging BWA players lower will open up the possibility for arbitrage, Trai had said.


The move will also be beneficial for top operators such as Bharti Airtel, Vodafone and Idea Cellular. These operators have large spectrum holdings and currently pay steep charges for spectrum usage. Bharti Airtel is estimated to be paying about 6.3% of its adjusted gross revenues as SUC, while Idea Cellular is understood to be shelling out 5%. Smaller operators such as

Tata Teleservices

may lose out as they currently pay around 3% as spectrum charges, and thus may need to shell out more.

"Having a flat rate is always better. A multi-layered system with different slabs creates complexities and has the potential to be misused," said Prashant Singhal, the telecom vertical head at Ernst & Young India. "It should be particularly beneficial for the larger operators."

COAI, a lobby group having members such as Airtel, Vodafone and Idea

Cellular

, has been pressing the government for a uniform rate for all service providers, including BWA operators. They have termed the lower charges on BWA operators as part of a "differential and discriminatory regime." Sources said any move to raise the charge for BWA operators may end up in court as Reliance Jio may take legal recourse to protect the rate that was originally mentioned in the notice inviting application when the spectrum sale took place.