COAI Urges Slashing of Spectrum Usage Charges

Though the government has decided to reduce spectrum usage charges (SUC) to 3 percent of adjusted gross revenue from 5 percent made by telecom companies, the industry stakeholders on Tuesday urged the Department of Telecommunications to further reduce it to 1 percent.

"We request that to start with SUC at a uniform rate of 3 percent be made applicable for all spectrum, which may be further reduced to 1 percent in a phased manner," the Cellular Operators' Association of India (COAI) said in a letter to Telecom Secretary J.S. Deepak on Tuesday. A copy of the letter is available with IANS.

The letter was written by COAI director general Rajan S. Mathews.

In a separate statement, Vodafone India said the government's plan to reduce SUC from 5 to 3 percent of AGR will bring in much needed relief to the highly capital intensive telecom sector.

"The telecom sector is severely debt laden (more than Rs. 3 lakh crores at last count and growing). This reduction in SUC charges from 5 to 3 percent will free cash-flows which can be invested towards further enhancing network and customer experience," said Sunil Sood, managing director and CEO, Vodafone India.

"It is a positive step that benefits the industry and is also in line with the Trai's (Telecom Regulatory Authority of India) recommendation of having a uniform, minimal SUC charge for all spectrum across the industry," he added.

The industry body - COAI - also urged for uniform SUC regime as it said the multiplicity of SUC rates leads to ambiguities while entering into merger and acquisitions and spectrum trading and sharing transactions.

"A uniform SUC will simplify the calculations and remove all arbitrages and ambiguities," the letter stated.