The Empowered Group of Ministers on Thursday stuck to its decision to collect a one-time spectrum fee from all operators with more than 4.4 Mhz for the remaining period of their licences.
But the Group added a new twist by deciding to collect an additional levy from operators that were given more than 6.2 Mhz spectrum from July 2008 onwards. The Government has given additional spectrum to 54 licencees from July 2008 but while giving these licences they were clearly told that they may be asked to pay for it at a later date. The impact of this additional levy will be around Rs 3,000 crore on all operators put together. The larger impact will be from the decision to collect the one-time fee on excess spectrum over 4.4 Mhz for GSM players and over 2.5 Mhz for CDMA operators.
Attorney General’s view
The Attorney General of India Ghoolam Vahanvati had suggested levying the one-time fee only from those players with more than 6.2 Mhz. He had also said that this fee should be effected from 2008 onwards. Although the EGoM overruled the AG’s view, the decision to collect the additional fee seems to have been taken as a compromise formula.
The EGoM’s decision on one-time fee will now be sent to the Cabinet next week for final ratification. The move will cost incumbent operators nearly Rs 27,000 crore collectively. The biggest impact will be on Bharat Sanchar Nigam Ltd followed by Bharti Airtel and Reliance Communications. The levy will be extrapolated from the final bid price that emerges in the upcoming auction to be held in November. Friday is the last date for operators interested in participating in the auction to submit their application with the DoT.
Spectrum re-farming
The EGoM did not take a decision on the other major issue of spectrum re-farming due to lack of time. “A lot of time was taken by other issues and there wasn’t enough time left to take a decision immediately on that (re-farming),” Kapil Sibal, Minister for Communication and IT, told reporters after a two-hour long meeting of the panel.
On Wednesday, the Telecom Commission recommended that incumbent GSM mobile phone firms will be asked to give up all their spectrum in the 900 Mhz band when their permits come up for renewal starting November 2014. The GSM operators are opposed to this re-farming exercise saying it will cost them over Rs 1 lakh crore in shifting to a new frequency band.
“We intend to take a decision on the re-farming issue prior to start of auction,” Sibal said. The government plans to begin auction of spectrum in the 1800 Mhz band on November 12.