EGoM asks telcos to pay Rs 27,000 cr

For the government,which has budgeted for Rs 40,000 crore from the auction,this would be a windfall,but the problem it may face is litigation by some of the companies. While it seems unlikely that the GSM operators like Bharti Airtel,Vodafone and Idea may move court against the measure,the chances of dual-technology operators like Reliance Communications (RCom) and Tata Teleservices (TTSL) doing so is high. The reason is that while the former were opposed to a one-time levy beyond 6.2 MHz since it only affected them,the 4.4 MHz option would be seen as a better option by them. However,dual-technology operators were vociferously opposed to any one-time charge below 6.2 MHz.

The AG had said that the government charge only those operators that had spectrum beyond 6.2 MHz from July 2008,the date on which the government had decided to levy a charge for excess spectrum. However,the EGoM at its earlier meeting favoured charging beyond 4.4 MHz as it saw it the most equitable and free from legal trouble. The EGoMs recommendations would now be put before the Cabinet on October 16 for a final ratification. On the face of it,operators like RCom and TTSL dont need to pay for the GSM spectrum since they hold only up to 4.4 MHz.

However,if they want to grow and need more spectrum,they have no option but to pay the market-determined rates,something they may not have had to do if the limit was beyond 6.2 MHz. In the current scenario,RCom and TTSL need to pay Rs 3,600 crore and Rs 2,400 crore,respectively,for the CDMA spectrum they hold beyond 2.5 MHz.

The payout may even force these two operators to think of surrendering the CDMA spectrum since the average revenue per user (Arpu) here is only around Rs 70,which is almost half their GSM Arpu.

The biggest to be hit would be the state-owned BSNL and MTNL,which together would have to fork out more than Rs 11,000 crore (BSNL Rs 6,250 crore and MTNL Rs 4,640 crore). The two operators have spectrum up to 12 MHz,which is the highest of any operator. Private operators like Bharti,Vodafone and Idea would have to pay Rs 5,600 crore,Rs 3,200 crore and Rs 2,200 crore,respectively. The three companies hold spectrum up to 10 MHz in some circles.

The EGoM also decided to offer some kind of relief to new operators who entered the market in 2008 through A Rajas largesse and found their licences cancelled by the Supreme Court in February. These companies would either be refunded their licence fee or they can have it adjusted in the auction if they choose to participate.

However,this would not apply to the ones that have been chargesheeted,like Unitech Wireless,Swan and Loop. The beneficiaries would be Sistema Shyam,Videocon,S Tel,TTSL and Idea.