NEW DELHI: The telecom department (DoT) has dropped plans to impose a one-time charge retrospectively on incumbent telcos such as Bharti Airtel, Vodafone, Idea and BSNL for all second-generation airwaves they hold in excess of 6.2 MHz, according to an internal government note reviewed by ET.
Instead, the DoT plans to impose this fee on a prospective basis for the remaining period of the licences of these companies. However, it has asked the Union Cabinet to take final call on this issue.
The move is expected to offer relief to the tune of Rs 10,00 crore to BSNL, while Bharti Airtel may save around Rs 8,000 crore, Vodafone Essar about Rs 5,000 crore and Idea Cellular close to Rs 2,000 crore, industry executives tracking the development said.
This marks an about-turn by the department. In December 2011, the Telecom Commission, the highest decision making body of the DoT, had cleared Trai's suggestion that telcos be charged retrospectively for their 2G holdings beyond the 6.2 MHz limit.
Sector regulator Trai had suggested that incumbents be charged Rs 4,572 crore for every MHz they held above this limit on a pan-India basis. Incumbents had threatened to go to court over this one-time fee as its implementation would have forced them to shell out over Rs 17,000 crore.
The Telecom Commission had ruled that incumbents pay either the administrated price set by Trai, or the price discovered in the 2010 sale of 3G airwaves, whichever was higher in that particular region. This would have increased the industry outgo to Rs 25,000 crore.
According to an internal DoT note that was presented to several ministries, the department now plans to link the prospective fee to the prices fetched in the upcoming 2G auctions following the cancellation of 122 licences by the Supreme Court.
For instance, if one unit of 2G spectrum is sold for say Rs 2,000 crore on a pan-India basis, this works to Rs 100 crore per year, since bandwidth is allotted for a 20-year period. So, an incumbent mobile phone company whose licence is valid for five more years (2017) must pay up Rs 500 crore during this period for every unit of airwaves it holds nationally beyond the 6.2 MHz limit.
Earlier this week, telecom minister Kapil Sibal when announcing a slew of policy changes had ducked the controversial issue of imposing a one-time fee on telcos. Sibal said that matters relating to pricing of spectrum and one-time fee had been deferred without divulging details.
If the Cabinet approves the department's plans of imposing this one-time fee prospectively, it will be yet another boost to incumbents, after the recent policy changes announced by Sibal.
On Wednesday, Sibal had extended an olive branch to older telcos by announcing that the maximum airwaves that companies can hold, also known as the prescribed limit, has been enhanced to 8 MHz in all regions except Delhi and Mumbai, where the cap is at 10 MHz.
"However, all operators can acquire more than the prescribed limit in the open market through auctions, subject to the condition that they don't own more than 25% of all bandwidth in the region," he had added.
Providing further relief to companies such as Bharti, Vodafone and BSNL, whose bandwidth holdings are higher than the revised limits in certain regions, Sibal had said that these companies will have to surrender their excess holdings only when their licences come up for renewal. ...... ET Beurou
Instead, the DoT plans to impose this fee on a prospective basis for the remaining period of the licences of these companies. However, it has asked the Union Cabinet to take final call on this issue.
The move is expected to offer relief to the tune of Rs 10,00 crore to BSNL, while Bharti Airtel may save around Rs 8,000 crore, Vodafone Essar about Rs 5,000 crore and Idea Cellular close to Rs 2,000 crore, industry executives tracking the development said.
This marks an about-turn by the department. In December 2011, the Telecom Commission, the highest decision making body of the DoT, had cleared Trai's suggestion that telcos be charged retrospectively for their 2G holdings beyond the 6.2 MHz limit.
Sector regulator Trai had suggested that incumbents be charged Rs 4,572 crore for every MHz they held above this limit on a pan-India basis. Incumbents had threatened to go to court over this one-time fee as its implementation would have forced them to shell out over Rs 17,000 crore.
The Telecom Commission had ruled that incumbents pay either the administrated price set by Trai, or the price discovered in the 2010 sale of 3G airwaves, whichever was higher in that particular region. This would have increased the industry outgo to Rs 25,000 crore.
According to an internal DoT note that was presented to several ministries, the department now plans to link the prospective fee to the prices fetched in the upcoming 2G auctions following the cancellation of 122 licences by the Supreme Court.
For instance, if one unit of 2G spectrum is sold for say Rs 2,000 crore on a pan-India basis, this works to Rs 100 crore per year, since bandwidth is allotted for a 20-year period. So, an incumbent mobile phone company whose licence is valid for five more years (2017) must pay up Rs 500 crore during this period for every unit of airwaves it holds nationally beyond the 6.2 MHz limit.
Earlier this week, telecom minister Kapil Sibal when announcing a slew of policy changes had ducked the controversial issue of imposing a one-time fee on telcos. Sibal said that matters relating to pricing of spectrum and one-time fee had been deferred without divulging details.
If the Cabinet approves the department's plans of imposing this one-time fee prospectively, it will be yet another boost to incumbents, after the recent policy changes announced by Sibal.
On Wednesday, Sibal had extended an olive branch to older telcos by announcing that the maximum airwaves that companies can hold, also known as the prescribed limit, has been enhanced to 8 MHz in all regions except Delhi and Mumbai, where the cap is at 10 MHz.
"However, all operators can acquire more than the prescribed limit in the open market through auctions, subject to the condition that they don't own more than 25% of all bandwidth in the region," he had added.
Providing further relief to companies such as Bharti, Vodafone and BSNL, whose bandwidth holdings are higher than the revised limits in certain regions, Sibal had said that these companies will have to surrender their excess holdings only when their licences come up for renewal. ...... ET Beurou
