EgoM decides on excess spectrum fee for Rs 27,000 cr

The empowered group of ministers (EGoM) on Thursday decided to charge the incumbent operators for the excess spectrum beyond 4.4 MHz from October. HT reports.

The empowered group of ministers (EGoM) on Thursday decided to charge the incumbent operators for the excess spectrum beyond 4.4 MHz from October.

If approved by the cabinet, this will result in a gain of about Rs 27,000 for the government. It also puts a huge financial burden on incumbent industry leaders like Airtel, Vodafone, Idea and Reliance Communications.

EGoM also decided that the incumbent operators will also be required to pay from July 2008 to October 2012 for spectrum beyond 6.25 Mhz at 2001 price indexed at the State bank of India's prime lending rate.

"The decision will have major impact on financials of all the incumbent operators," said Prashant Singhal, partner, Ernst and Young.

Bharti Airtel may have to pay around Rs 4,500 crore more, Vodafone about Rs 3,000 crore, RComm around Rs 3,600 crore and Idea around Rs 2,200 crore.

However, Bharti and Vodafone would have ended up paying much more if the EGoM had accepted attorney general's (AG) opinion. AG had said these operators should be charged at the market determined rate.

Bharti share price closed 1.7% down at Rs 266 at the Bombay Stock Exchange on Thursday, as the market expected that the EGoM may accept AG's opinion. The EGoM decision came after markets were closed.