The government will increase the spectrum charges for all existing mobile telecom service providers by up to 50 per cent before auctioning 3G spectrum. Telecom Commission, the highest decision making authority in the Telecom Ministry, has already approved the decision.
Telecom service providers have to pay a percentage of their adjusted gross revenue (AGR) to the government as spectrum charge. This charge depends on the quantity of spectrum allotted. For example, a GSM operator has to pay 2 per cent of its AGR as spectrum charge. This will increase to 3 per cent.
“This increase was necessary as spectrum is a scarce resource,” said a senior DoT official. “Existing operators were allotted additional spectrum without arriving at any scientific pricing. The only criteria was subscriber base.”
However, these charges may not be applicable if the government decides to allot additional spectrum through the auction route, the official added.
“Telecom operators are already paying about 30 per cent of their revenues as various levies to the government,” said T.R. Dua, director-general, Cellular Operators Association of India. “This increase will put an additional burden on companies. In a hyper-competitive market, this will hurt their profits.”
Currently, Bharti Airtel and Vodafone use more than 8.2 MHz of spectrum in metros like Delhi and Mumbai. Therefore, they will have to pay 8 per cent of AGR as spectrum charges, up from 6 per cent today.
“The government should have waited for overall pricing of spectrum and 3G auction,” said B.K. Singal, senior principal, Dua Consulting.