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5G auctions: Govt scraps 3% spectrum usage charge charge

Our Bureau | Updated on: Jun 22, 2022

| Photo Credit: PRASHANT NAKWE

To give TSPs more choice for the upcoming spectrum auctions in July

New Delhi, June 22

In a bid to provide relief to telecom service providers (TSPs), the government, in an order, said that spectrum usage charge (SUC) would not be charged for spectrum acquired through auctions held after September 15, 2021, in different access bands.

Earlier, the government charged three per cent floor prices on SUC. Telecom service providers had recently told the Department of Telecommunications (DoT) that merely scrapping the SUC for spectrum acquired in future auctions, starting with the upcoming auctions would be meaningless, if the SUC floor rate, equivalent to three per cent of adjusted gross revenue (AGR), remains.

“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 broadband wireless access spectrum in 2300MHz/ 2500 MHz band acquired in 2010 auction, shall be applied for charging SUC,” said the DoT in the order).

It further said that the weighted average is to be derived by a sum of product of spectrum holdings and applicable SUC rate divided by total spectrum holding. “The weighted average rate should be determined operator-wise for each service area,” it said.

According to analysts and industry veterans, this would give a bit of relief to TSPs (by a few thousands of crore rupees), thereby giving them more choice for the upcoming spectrum auctions in July.

“We welcome the much-awaited DoT order regarding the levy of SUC charges for spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz 2500 MHz, 3300 MHz and 26 GHz bands. The order will provide clarity to telecom service providers for the upcoming auctions,” said SP Kochhar, Director General, Cellular Operators’ Association of India (COAI).

COAI represents telcos such as Bharti Airtel, Reliance Jio and Vodafone Idea. The DoT Order also mentioned that for the purpose of calculation of spectrum usage charges, there will be a minimum/ presumptiveAGR, which will be not less than five per cent of the bid amount. “The calculation of spectrum usage charges shall be on the basis of minimum/ presumptive AGR, or the actual AGR, whichever is higher,” it said.

“The order shall come into force with immediate effect. The above rate of SUC is subject to review by the government from time to time,” it added.

Published on June 22, 2022
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