While the price discovered in the auction beginning 12th November will apply for the one-time fee to be charged from incumbent GSM operators, the DoT will work out the basis for the same for CDMA carriers
New Delhi: The Cabinet on Thursday approved levy of about Rs31,000 crore as one-time fee on spectrum held by incumbent telecom operators such as Bharti Airtel and Vodafone in an attempt to create level playing field between old and new operators, reports PTI.
Finance Minister P Chidambaram said the Cabinet has approved the recommendation of an Empowered Group of Ministers (EGoM) that GSM-based telecom operators be asked to pay for airwaves they hold beyond 4.4 Mega-Hertz at an auction-determined price, while CDMA carriers pay for holdings beyond 2.5 MHz, for the remaining validity of their permits.
GSM-operators holding more than 6.2 MHz of spectrum will pay a retroactive fee for the airwaves from July 2008.
Chidambaram said while the price discovered in the auction beginning 12th November will apply for the one-time fee to be charged from incumbent GSM operators, the Department of Telecom (DoT) will work out the basis for the same for CDMA carriers.
This is because there is no bidder for CDMA auction now and so there will be no auction determined price, he said.
"Similar recommendations (of auction determined price being levied) were made for CDMA but there has been subsequent developments since the EGoM meeting that bidders who had evinced interest for CDMA auction have withdrawn from the auction. Therefore there is no auction now for the CDMA," he said.
"DoT has been requested to come back to the Cabinet regarding implementation of the decision regarding CDMA," he added. .
The government had planned to hold two separate auctions for spectrum used by GSM and CDMA-based mobile phone carriers hoping to reap a combined Rs40,000 crore revenue.
It has set a base price of Rs14,000 crore for 5 MHz of a pan-India GSM spectrum, more than seven times what companies paid in 2008 to get telecom licenses. For CDMA, the base price was set at 1.3 times the GSM airwaves.
However, no bidder is left in fray for CDMA auction after Tata Teleservices and Videocon Telecommunications withdrew from the sale.
Chidambaram said licensees "will be given an option to surrender spectrum beyond 4.4 MHz for GSM" if they don't want the one-time fee.
Also, payments can be made in equated annual instalments at 9.75% interest rate.
"The licensees will be allowed equated annual instalments for the balance number of years of license (such that the last instalment is payable not later than 12 calendar months prior to expiry of the license)," official statement said.
The Cabinet has also allowed sharing of spectrum, or radiowaves, among telecom operators who have paid for it beyond 4.4 MHz (GSM) as per the decision will be allowed.
"If two service providers are there and both have paid for spectrum 4.4 Mhz, then no charge. But both TSPs will have to pay spectrum usage charge at the slab rate applicable on entire combined spectrum holding," Telecom Minister Kapil Sibal said.
The Cabinet also decided on intra-service area merger. A company acquiring an operator, which was given spectrum at old rate of Rs1,658 crore, will have to pay for radiowaves that the target company holds as per the price determined through auction starting 12th November 12.
"If company which has got 4.4 (Mhz spectrum), not beyond 4.4 (Mhz spectrum), is going to be acquired and they got the licence based on entry fee, then in that case resultant merged entity will be required to pay to the government differential between entry fee and current auction determined price," Sibal said.
On the issue of allotment of initial spectrum to firms that have paid the requisite fee but have not been allotted spectrum so far, the Cabinet decided that the claim of such company for allotment of 4.4 MHz of spectrum will be considered after the completion of auction process, subject to availability of spectrum.
"This is only related to one case, Tata's. So after this (auction) process is completed the issue will be considered," Sibal said.
The decisions are expected to result in more efficient utilisation of the scarce natural resource, facilitating proliferation of telecom services in the country, he added.
On the issue of levying one-time spectrum fee, Sibal said, "On CDMA issue, we will come back to the Cabinet because there is auction discovered price now, but that does not mean that (they) will get away without paying the price."
He said the government will determine the basis on which that price is to be paid in the interim, before the auction takes place. The discovered price will then be paid and it will be adjusted in the auction determined price.