Cabinet approves 3% usage charge for upcoming spectrum auctions

Govt expects to raise at least Rs64,000 crore from the auction of about 2,300 Mhz of spectrum and Rs98,995 crore from various levies in the telecom sector in this financial year


The Union cabinet on Wednesday approved 3% annual usage charge for the spectrum to be procured in the upcoming auction. Photo: Mint
The Union cabinet on Wednesday approved 3% annual usage charge for the spectrum to be procured in the upcoming auction. Photo: Mint

New Delhi: Setting the stage for the country’s biggest ever spectrum sale, the cabinet on Wednesday approved 3% annual usage charge for the spectrum to be procured in the upcoming auction.

“The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the rates for Spectrum Usage Charge or SUC for various bands of spectrum for which auction is going to be conducted shortly. With this, the path is clear for issuance of the Notice Inviting Application for the auctions by the Telecom Department,” an official statement said.

The government expects to raise at least Rs64,000 crore from the auction of about 2,300 Mhz of spectrum and Rs98,995 crore from various levies and services in the telecom sector in this financial year.

As per the decision, spectrum to be sold in the bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz will attract SUC at the rate of 3% of the Adjusted Gross Revenue.

The SUC for telecom operators holding BWA airwaves (2300 Mhz band) in 2010 auction alongwith other set of spectrum will be calculated on the basis of weighted average.

“The weighted average of SUC rates across all spectrum assigned to an operator (whether assigned administratively or through auction or through trading) in all access spectrum bands, including BWA spectrum obtained in 2010 auction, shall be applied for charging SUC, subject to a minimum of 3% of AGR excluding revenue from wireline services,” an official release said.

Sources said that bidding for Rs5.66 lakh crore mega-spectrum auction will start in 45-50 days. The uniform SUC rate has been a highly contentious issue of late with the industry due to difference in the fee for 2300 MHz band (1%) and other bands.

Reliance Jio, which bagged airwaves in 2300 Mhz band in 2010 auction, has opposed levying of uniform SUC rate, as suggested by Trai, as it pays only 1% fee on the BWA spectrum as per the norms fixed for sale at that time.

However, it acquired some spectrum later on which higher SUC was being charged and the company is required to pay as per the weighted average formula.

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