Govt's spectrum fee cut to save telcos Rs 3200 cr

After recommendation from the Telecom Ministry, the government has reduced the spectrum usage charges (SUC) from existing 5 per cent to 3 per cent of the revenue earned by companies from telecom services.

"The Telecom Commission has agreed to charge SUC at 3 per cent level of adjusted gross revenue on spectrum that will be purchased in next round of auction.

Now, it will be sent to the Cabinet for the final approval," a report said.

Spectrum usage charges were earlier linked to the quantum of spectrum holding of an operator in the range of 3-8 per cent of their adjusted gross revenue.

After evaluating the impact on the exchequer, the government, in January 2014, decided to cap SUC at 5 per cent on spectrum that was to be procured in a future auction. The SUC collection was at 4.8 per cent level that time.

Existing telecom operators were asked to pay the weighted average of their existing SUC (on old rate of 3-8 per cent), and 5 per cent if they acquire a new spectrum.

The development is expected to be welcomed by the telecom industry and may help save telcos Rs 3,200 crore.

Also, the move came a few months before the auction of 2,000MHz of spectrum across seven frequencies. It will also include the highly-expensive 700MHz band.

However, the recommendation faced stiff opposition from Reliance Jio which holds pan India broadband wireless access spectrum on which 1 per cent SUC is imposed.

The government had then asked all BWA holders, including Aircel, Airtel, to continue paying 1 per cent on BWA but they were asked to pay 5 per cent of adjusted gross revenue on all spectrum they will purchase in future.

-with inputs from PTI