DoT recalculating one-time spectrum fee, telcos likely to benefit

Old telecom operators are likely to get some relief in one-time spectrum charges, which is estimated at Rs. 23,197 crore at present, as the DoT is recalculating rates afresh based on February auction price.

"There will be a revision in rates of four circles - Delhi, Mumbai, Karnataka and Rajasthan - for 1800MHz and in three metros where auction for 900MHz band were held in February. Rest will remain the same," a DoT official told PTI.

"The process has started. I cannot share exact time when the notice will be send but possibly within a month," the official said.

The one spectrum fee is the charge operators were asked to pay for holding additional spectrum. In 2008, telecom firms were given 4.4MHz spectrum along with licence for Rs. 1,658 crore for pan-India operations. Most of the operators were allocated additional spectrum without charing upfront charges.

The government in 2012 had decided that operators should pay for holding spectrum above 6.2MHz retrospectively, from July 2008 to January 1, 2013 based on market determined price decided in auction.

The DoT had raised a total demand of Rs. 23,197 crore from telecom operators, who were issue licences in 2008 (old telecom operators). The amount was arrived at on the basis of

floor price fixed for November, 2012 auction. The bid got tepid response as the base price was considered high.

As per this calculation, state-owned BSNL had to pay around Rs. 6,912 crore, Bharti Airtel Rs. 5,201 crore, Vodafone Rs. 3,599 crore, MTNL Rs. 3,205 crore, Idea Cellular Rs. 2,113 crore, Aircel Rs. 1,365 crore, Loop Mobile Rs. 606 crore and Reliance Communications Rs. 173 crore.

No bids were received for 1800MHz, widely known as 2G spectrum, in Delhi, Mumbai, Karnataka and Rajasthan in 2012 auction but the demand for one-time spectrum charges were raised based on base price.

Similarly demand for 900MHz band airwaves was raised based on reserve price formula approved by Cabinet which was to charge two times on the price of 2G spectrum.

The final 2G spectrum price in 2012 auction, despite aggressive bidding, is about 34 percent lower in Delhi, 50 percent in Mumbai, 41 percent in Karnataka and 51 percent in Rajasthan compared to the base price fixed for 2012 auctions.

Therefore, if prices were to revised under the 2013 auction price, operators would get a discount of about up to 51 percent for Rajasthan circle, 25 percent in Mumbai service ares in and 34 percent in Delhi in 1800MHz.

Similarly, the final bidding price in 2013 for 900MHz spectrum, considered two times more efficient than 2G spectrum, was about 5 percent lower in Delhi and 26 percent in Mumbai compared to base price fixed for 2013 auction.

In Kolkata price of 900Mhz band spectrum about 7 percent higher compared to base price fixed for 2012 auctions.

Telecom operators have challenged before court the government decision to levy a one-time spectrum fee. The is sub-judice now.