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BW Businessworld

EGoM Recommends One-time Fee For Telcos

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A ministerial panel on 8 October gave the go-ahead to a proposal to charge mobile phone carriers a one-time fee for their existing second-generation airwave holdings over and above 4.4MHz at the auction-determined price for the balance period of their licences. The government expects to raise Rs 27,000 crore revenue from the one-time spectrum fee from existing telecom operator. However, the final decision on this is expected to be taken by the Union Cabinet next week.
The move will affect older carriers including Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications.   
The EGoM also decided to refund licence fee of companies whose telecom licences stand cancelled but have no criminal charge against them.
"If there is no case or no action is going on against telecom companies for no fault on their part (in obtaining licence in 2008), then the amount (licence fee of Rs 1,658 crore) will be refunded," an official said.
He said the government will adjust this Rs 1,658 crore against the final price of spectrum that companies, whose licences were cancelled, will have to pay at the end of the November auction of airwaves.
The decision on the one-time fee has been delayed for quite some time. At the last meeting of the empowered group of ministers (EGoM) on October 3, no decision was taken since it was awaiting the opinion of the Attorney General on the issue.
Refusing to comment on the decisions taken by the EGoM, Sibal told the media, "Till the matter goes to the Cabinet, I couldn't possibly tell you the details of the decision but all the issues placed that were placed before the EGoM have been resolved."
Sibal said the timing of the Cabinet meeting depends on the Prime Minister's Office. "If the Cabinet meets on October 16, we will try that the Cabinet takes a decision on all issues... We are trying to resolve all these issues before October 19."
The decision taken is different from the four suggestions provided by the Department of Telecommunications (DoT). The DoT proposals included –no charge; a one-time levy on all spectrum held by existing telecom operators; a fee on spectrum held beyond the start-up of 4.4 MHz; or levy a fee on airwaves held beyond the contracted spectrum of 6.2 MHz.
The idea behind the one-time fee is to provide a level playing field to operators who will start bidding for nationwide spectrum in the November auction at Rs 14,000 crore. They will compete with existing players were allocated pan-India permits with 4.4 Mhz of airwaves at Rs 1,658 crore.

The Union government hopes to raise upwards of Rs 27,000 crore by levying a one-time charge, prospectively, on telecom companies which hold over 4.4 Mhz of GSM spectrum, or over 2.5 Mhz of CDMA spectrum.
(With input from agencies)