Telecom operators to pay one-time fee for GSM spectrum beyond 4.4 Mhz

In a crucial meeting of the Empowered Group of Ministers (EGoM) on telecom, it was decided that all GSM operators will have to pay a one-time fee for the remaining period of their 20-year licence for spectrums beyond 4.4 Mhz, while CDMA operators will have to pay for all spectrum beyond 2.5 Mhz. The EGoM’s decision will now be sent to the Cabinet for final ratification and the cut-off date for calculating the fee will be the one on which the Cabinet clears the EGoM decision.

The Cabinet is expected to take a final decision by October 16, well before the last date for submission of bids by prospective operators for the 2G spectrum auction. However, the pricing will be based on the final bid price in the upcoming spectrum auction in November. The base price for this auction is set at Rs 14,000 crore for 5 Mhz of spectrum pan-India.

The EGoM’s decision was in contrast to the opinion of the Attorney General of India, who had said a one-time charge should be levied on spectrum beyond 6.2 MHz but retrospectively from July 2008. The group of ministers has also cleared a deferred payment schedule for spectrum, entailing 33 per cent upfront payment for GSM and 25 per cent for CDMA. However, there will be a moratorium of two years if the balance licence period is greater than 15 years, one year if it is between 10 and 15 years and none if the balance is less than 10 years.

Giving some relief to the operators whose licences got quashed recently by a Supreme Court order, the EGoM decided to refund the licence fee of Rs 1,658 crore paid by them in case they did not win in the 2G auction, while in case of them winning, the amount will be adjusted with what they pay for auctioned spectrum.