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Airtel, Vodafone to benefit as ministerial panel fixes usage fee for new spectrum at 5%

27 January, 2014

The Empowered Group of Ministers on telecommunications, headed by Finance Minister P Chidambaram, on Monday decided a spectrum usage charge (SUC) of 5 per cent of the annual gross revenue on all new 2G airwaves to be acquired in the auction. The SUC will be computed using weighted average method and is subject to approval from the Union Cabinet.

Currently the government charges 3-8 per cent fee depending on the quantum of spectrum held by a carrier. The top players Airtel and Vodafone pay around 6 per cent and so the proposed cap will benefit them.

The new rate, however, would affect smaller players which pay around 3 per cent as of now. The independent sector regulator had asked for a flat 3 per cent rate.

The ministerial panel has also decided to keep the SUC for broadband wireless access spectrum unchanged at 1 per cent. This is expected to benefit Mukesh Ambani-led Reliance Jio, which has pan-India BWA spectrum and is in the process of launching its services.

In the upcoming spectrum auction, eight firms have applied to participate, including Reliance Jio. Other applicants are Vodafone, Airtel, Aircel, Tata Teleservices, Idea Cellular, Telewings (Uninor) and Reliance Communications. 

Nearly 45 MHz are being put up for auction in 900 MHz and 403 MHz in 1800 MHz. An operator is required to buy a minimum of 5MHz of spectrum. The auction is scheduled for next week.

(Edited by Joby Puthuparampil Johnson)


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Airtel, Vodafone to benefit as ministerial panel fixes usage fee for new spectrum at 5%

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