The Finance Ministry is expecting to get Rs 40,847 crore from telecom services, including sale of spectrum and annual licence fee, in 2013-14. Last year, the Ministry had pegged income from telecom at around Rs 58,217 crore but ended up getting only Rs 19,440 crore after two rounds of failed spectrum auction.

The Union Government is planning to hold another round of auction for selling spectrum in the 1,800 MHz band. In addition, it will also hold auction for the 900 MHz band as part of the refarming plan. “Those operators who wish to continue to offer services will have to buy spectrum,” said Finance Minister P. Chidambaram at the post-Budget press briefing.

one-time fee

However, the big question is how the Government will resolve the legal issue around spectrum. For example, Vodafone has gone to the court challenging the Government’s decision to sell spectrum in the 900 MHz band. Incumbent players currently hold spectrum in the 900 MHz band, but the Government wants to move them out and put it up for auction. In addition, the Finance Ministry is expecting money from the one-time fee imposed on incumbent operators who hold more than 4.4 MHz spectrum.

In November, spectrum auction attracted bids worth Rs 9,407.64 crore against expectations of Rs 28,000 crore. Most of the telecom operators which won spectrum were given the option of deferred payment and some also had the option to adjust the entry fee they paid in 2008. The Government received a net Rs 1,706.92 crore from auction of spectrum this fiscal.

Telecom companies said that the revenue expected in 2013-14 is overoptimistic. “The track record of the auctions so far has been disappointing, to say the least. The 800 MHz auctions will yield Rs. 5,000 crore or so, and after adjusting the price of cancelled licences and the amortisation facility, the actual inflows will be well below that,” said Ashok Sud, Secretary General, Association of Unified Telecom Service Providers of India.

thomas.thomas@thehindu.co.in

(This article was published on February 28, 2013)
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