Govt may earn over Rs 1 trillion from telcos

New Delhi: The government could make more than Rs 1 trillion if the proposal to charge the country’s incumbent telecom service providers a one-time fee for the spectrum they have is accepted by the cabinet, according to department of telecommunications (DoT) estimates.

If the cabinet chooses the option of charging the operators for all the spectrum they hold, the government could stand to make as much as Rs 72,506 crore from operators on the GSM technology platform and another Rs 54,000 crore from the country’s CDMA-based operators.

This proposal will adversely impact dual-technology operators such as Reliance Communications Ltd and Tata Teleservices Ltd, which have permits that are valid for several more years. The treatment of GSM spectrum as additional radio waves will also come into question. If the cabinet chooses the second option of charging the operators for spectrum above the start-up 4.4 megahertz (MHz), then the hit for the incumbent GSM operators, as a whole, would be almost Rs 27,300 crore, while the CDMA operators, for above 2.5MHz, would lose as much as Rs 20,581 crore.

If the cabinet chooses the third option of making the operators pay for spectrum above the contracted 6.2MHz, then according to DoT estimates, the government would get Rs 29,288 crore from just the GSM operators.

This option will have maximum impact on state-run operators Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd, as well as Bharti Airtel Ltd and Vodafone India Ltd.

The estimates are part of the proposals forwarded to the cabinet committee on infrastructure for a decision at its meeting on Tuesday. The cabinet, which has to take the final decision, forwarded the matter to the empowered group of ministers that is looking into 2G auction issues.

Interestingly, DoT has decided to remove the option of charging the operators for spectrum retrospectively and instead based its estimates on operators paying for spectrum from 1 October.

“A decision on whether to charge the operators retrospectively will be based on the outcome of the presidential reference that is with the Supreme Court,” said R. Chandrashekhar, secretary, DoT.

The cabinet deferred its decision after the finance ministry, the Planning Commission and the department of industrial policy and promotion, severely criticized the proposals. A 30 June internal finance ministry note that criticised the proposal, arguing breach of contract and impact on investor sentiment, said the opinion had “the approval of the Prime Minister and the finance minister”.

“Some licensees have already approached the TDSAT (telecom disputes settlement and appellate tribunal) for start-up spectrum they are waiting for as well as the 1.8MHz top-up spectrum to take their holdings to the contracted 6.2MHz,” a DoT official said, requesting anonymity. The official said its preferred choice remained paying the auctioned-determined price prospectively for all spectrum currently held.

Telecom Regulatory Authority of India (Trai) had suggested, in its recommendations on the issue, to charge the operators only for spectrum above 6.2MHz prospectively.

shauvik.g@livemint.com