Telecom players likely to challenge one-time spectrum fee

10 Jan 2013 Evaluate

India's leading cellular players are expected to challenge a government demand for surcharges aggregating more than Rs 23,000 crore on their airwave holdings. The government traditionally sold airwaves bundle with permits at a low state-set price, but following a scandal over the grant process a recent auction of second-generation airwaves has resulted in newer carriers paying nearly seven times more.

After the cabinet approved the plan in November, telecom ministry has started issuing notices to telecom players including Bharti Airtel and Vodafone Group demanding to pay the surcharge. The government added that the surcharges for long-established telecom players are aimed at creating a balanced level between old and new operators. Whereas, as per the older operators, the move violates the conditions of their licence agreements with the government.

To be more precise, the government is expected to get Rs 4,251.83 crore from retrospective charges, Rs 18,925.82 crore from prospective charges. In all Rs 23,977.65 crore is expected from levy of one-time spectrum fee. Accordingly, state-owned BSNL will have to pay around Rs 6,912 crore, followed by Bharti Airtel - Rs 5,201 crore, Vodafone - Rs 3,599 crore, MTNL - Rs 3,205 crore, Idea Cellular - Rs 2,113 crore (includes Rs 231.5 crore of Spice), Aircel - Rs 1,365 crore (includes Rs 14 crore of Dishnet), Loop Mobile - Rs 606 crore and Reliance Communications - Rs 173 crore.

Further, for paying the surcharge, companies have the option to pay the money upfront or in annual installments with a 9.75 percent interest. Additionally, Reliance Communications, which is operating GSM and rival CDMA technology for mobile services, will have to separately pay surcharges for CDMA airwaves. Further, CDMA surcharges are yet to be finalized as the government is waiting for an auction in March.

Meanwhile, the Cellular Operators Association of India, which has most of the country's major carriers among its members, said ‘our lawyers will review those and then most probably we'll go to Telecom Disputes Settlement and Appellate Tribunal (TDSAT). Further, the surcharges are for companies operating on the GSM technology platform and are benchmarked to winning bid prices in the recent auction.

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