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TMCNet:  Cabinet approves one-time spectrum fee

[November 08, 2012]

Cabinet approves one-time spectrum fee

NEW DELHI, Nov 08, 2012 (Mint - McClatchy-Tribune Information Services via COMTEX) -- The Cabinet on Thursday approved the empowered group of minister's (EGoM's) recommendations on the one-time fee for spectrum held by older operators.

The ministerial panel had recommended, in a meeting on 18 October, that existing operators would have to pay for holding spectrum above 6.2 megahertz (MHz) retrospectively from July 2008 till 1 January 2013. They would have to pay for spectrum they hold above 4.4MHz for the remaining period of their licences starting 1 January 2013.

The price of the spectrum would be determined based on the price discovered in the 1800MHz spectrum auction that is scheduled to begin next week. Operators holding spectrum in the more efficient 900MHz band will have to pay twice the reserve price for the 1800MHz spectrum auction as an one-time fee. When the auction for the 900MHz spectrum is held later, the money paid by the operators would be adjusted based on the price discovered in the auction, according to an internal note prepared by the department of telecommunication (DoT) for the cabinet, based on the eGoM's decision.

As reported by Mint, earlier this week, the government is estimated to make a minimum of Rs.30,000 crore from the decision. However, this estimate may come down marginally as the Cabinet decided against charging the fee for CDMA operators for now. A decision on the fee for the spectrum will be taken in January.

The Cabinet decided to defer the decision after telecom companies decided against participating in the auction of spectrum in the 800Mhz band that was expected to start two days after the 1800Mhz band auction concluded. The 1800Mhz band auction is expected to begin on Monday.

The earnings for the government are likely to come further down as the Cabinet has allowed public sector companies Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd exemption from paying the one-time fee.

This decision is likely to be contested by the other telcos affected by the decision in the court.

Communications minister Kapil Sibal also said Tata Teleservices would be allotted start-up spectrum in New Delhi, something the company has been demanding for many years now.

For operators that have spectrum in both the 900MHz and 1800MHz bands, the initial 4.4MHz spectrum that an operator gets for free will comprise the cheaper 1800MHz spectrum.

Operators will be allowed to share the spectrum once it is paid for, but permission for sharing will only be valid for five years. The operators will also be allowed to pay for the spectrum in equated annual instalments at an interest rate of 9.75%, depending on the finance ministry's approval. They can also pay the full amount upfront or prepay the instalments as well as surrender spectrum that they don't want to pay for. The price for the spectrum will be based on the 2001 price of Rs.1,658 crore for pan-India spectrum, indexed at the State Bank of India prime lending rate of 3.75% till 2008.

The government is likely to raise about Rs.1 trillion from spectrum refarming, the 1800MHz airwaves auction and the one-time fee, according to telecom analysts.

___ (c)2012 the Mint (New Delhi) Visit the Mint (New Delhi) at Distributed by MCT Information Services

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