On the last day for operators to withdraw the applications for the auction, the Empowered Group of Ministers (EGoM) on telecom, approved a spectrum usage charge (SUC) of 5 percent of the annual gross revenue for all new spectrum acquired in the auction. Earlier, the SUC, which is levied annually by the government as percentage of revenue earned by telecom companies from telecom services, varied between 3 to 8 percent in case of mobile operators.
As per the decision, existing telecom operators will have to pay the weighted average of their existing SUC and 5 per cent if they acquire new spectrum. Further, the EGoM decided to retain SUC for broadband wireless access (BWA) spectrum at 1 per cent as the government has not amended the existing contractual obligation. The group of ministers outlined that the companies earning from existing BWA airwaves and new spectrum will have to report revenues separately.
Overall, the move is expected to benefit big telecom players as it will leave surplus cash in their hands to invest in spectrum auction, the rationalization of SUC is likely to impact government revenue in the short-run. Nevertheless, this move is more of an effort to cajole previously reluctant operators for participating in government's third attempt at auctioning two frequency bands after two previous attempts to pull off the sale were boycotted by major mobile phone operators that complained minimum bid prices were too high.