India's telecom watchdog on Tuesday suggested a one-time levy on unused radio spectrum with service providers based on the price derived from the auction for 3G frequency that could bring Rs.35,000 crore ($7.7 billion) of additional revenue for the government.
The Telecom Regulatory Authority of India (TRAI) also recommended the removal of curbs on the sale of stake by service providers, in a move that could lay the groundwork for major consolidation in the world's second largest mobile phone network and the fastest growing among emerging economies.
India currently imposes a three-year cap since the grant of operator licence on telecom companies before the promoters can sell their majority stakes. This clause has prevented a consolidation in the market where spectrum is at a premium.
The watchdog said telecom operators like Bharti, Vodafone and Reliance Communications, which hold radio spectrum beyond 6.2 mega hertz be charged a one-time fee based on the price derived from the ongoing auction for frequency for 3G services.
The regulator -- whose recommendations may or may not be accepted by the government -- has also called for a spectrum cap per operator of 10 mega hertz for Delhi and Mumbai and 8 mega hertz for other circles to be imposed on operators.
“As per our estimates, there is 156 mega hertz of spectrum beyond 6.2 mega hertz across India. So, going by the price being discovered for the 3G spectrum, it could amount to a revenue of Rs.30,000-Rs.35,000 crore,” said TRAI Chairman JS Sarma.
“What we have said is that beyond 6.2 mega hertz, the price must be paid,” Sarma told reporters here.
The move comes against the backdrop of the government being assured at least Rs.54,000 crore worth of revenues from the ongoing auction of 3G spectrum. The opposition parties had also charged that the spectrum for 2G telephony was handed over rather cheap.
At the end of March, India had 584.32 million wireless telecom subscribers, serviced by 15 companies, including two public sector undertakings. As many as 20.31 million new additions accrued in March alone.
The dominant players are Bharti Airtel with a 21.84 percent share, followed by Reliance Communications with 17.53 percent, Vodafone with 17.26 percent, Bharat Sanchar Nigam Ltd with 11.89 percent, Tata Teleservices with 11.29 percent and Idea Mobile with 10.92 percent.