TGIF: Govt set to earn Rs. 15,296 crore from spectrum revenue | business | Hindustan Times
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TGIF: Govt set to earn Rs. 15,296 crore from spectrum revenue

business Updated: Feb 18, 2014 02:53 IST
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Spectrum -- the radio frequencies necessary for mobile devices to send, receive, voice and data--is turning out to be a cash cow for the government, as it is expected to secure a minimum of Rs. 15,296 crore by Friday, out of the targeted Rs. 40,847.06 crore from all communications services (as of 2013-14 budget estimate).

The minimum amount accounts for a quarter of the total Rs. 61,000 crore secured by the government from the recently concluded 2G spectrum auction.

On Monday, finance minister P Chidambaram presented the vote-on account, the interim budget for 2014-15, with an overview of the revenue that government has been able to generate from various activities.

The government can now expect assured annual revenues from the spectrum sale , at least until 2032, with telecom service licences of Bharti, Vodafone, Idea and Reliance, slated to come up for renewal.

As per current norms, companies seeking licence renewal for 2G spectrum would have to bid for it. Further, the 800-megahertz spectrum is scheduled to be put on block in 2014-15. The spectrum that was already auctioned was in the 900-1800 Mhz band range.

Going forward, the government is assured to get a Rs. 38,954.02 crore in 2014-15 including a the staggered payment for the spectrum sale, as per the deferred payment mechanism, provided for those picking spectrum at the 2G spectrum held recently.

"The government has a clear annual road map of revenue accrual from the spectrum sale till 2032 and with minutes of usage from data services set to increase, the revenue will only grow," says Jaideep Ghosh, partner, KPMG Advisory Services.

Annually, there are two ways government gets revenue from telecom service providers: through usage charges from private operators for leased spectrum (1-8%) and adjusted gross revenues (AGR) for the telecom licences (on the revenue earned in a telecom circle on a predetermined percent for it-6-10 %).

As per the revised norms for 2015-16, the government revenue from the former will be (1-5%) with an unchanged AGR rate.