Telcos Likely To Challenge Spectrum Fee

India's leading cellular carriers are likely to challenge a government demand for surcharges totalling more than Rs  23,000 crore on their airwave holdings, an industry official said.

 

India traditionally sold airwaves bundled with permits at a low state-set price, but following a scandal over the grant process a recent auction of second-generation airwaves has resulted in newer carriers paying nearly seven times more.

 

The telecommunications ministry has started sending notices demanding carriers including Bharti Airtel Ltd and Vodafone Group Plc's local unit pay a surcharge, four sources with direct knowledge said, after the cabinet approved the plan in November.

 

"Our lawyers will review those and then most probably we'll go to TDSAT (Telecom Disputes Settlement and Appellate Tribunal)," said Rajan Mathews, director general of industry lobby Cellular Operators Association of India, which has most of the country's major carriers among its members.

 

The government has said the surcharges on long-established carriers are aimed at creating a level playing field between old and new operators. The older operators say the move violates the conditions of their licence agreements with the government.

 

The government is likely to get Rs 4,251.83 crore from retrospective charges, and Rs 18,925.82 from prospective charges for excess radiowaves held by mobile operators. In all, around Rs 23,177 crore is expected from levy of one-time spectrum fee, sources added.

 

State-owned BSNL will have to pay around Rs 6,912 crore, followed by Bharti Airtel - Rs 5,201 crore, Vodafone — Rs 3,599 crore, MTNL — Rs 3,205 crore, Idea Cellular — Rs 2,113 crore (includes Rs 231.5 crore of Spice), Aircel - Rs 1,365 crore (includes Rs 14 crore of Dishnet), Loop Mobile - Rs 606 crore and Reliance Communications - Rs 173 crore.

 

Sources said telecom operators have been asked to pay the amount either upfront or in equal annual instalments for the balance number of years of licence in a manner that the last instalment is paid a year before the expiry of company's licences with a 9.75 per cent interest. Telecom operators not willing to pay the one-time fee have been given the option to surrender their additional and excess spectrum.

 

The surcharges are for companies operating on the GSM technology platform and are benchmarked to winning bid prices in the recent auction. 

 

Reliance Communications, which operates mobile services on both GSM and rival CDMA technology, will have to separately pay surcharges for CDMA airwaves. The CDMA surcharges are yet to be finalised as the government is waiting for an auction in March.

 

The scandal over cut-price lucrative phone permits in India, the world's second-biggest telecoms market by customers, has so far led to a former minister and several high-profile corporate executives facing trial. The Supreme Court last year ordered permits of several carriers to be revoked.