Bharti Airtel, Vodafone ask govt to decide SUC before auction

Telecom Commission currently discussing matter and is scheduled to meet on Jan 25

The country’s top two telecom operators, Bharti Airtel and Vodafone, has requested the Government to take a final call on the much-debated issue of spectrum usage charge (SUC), which is part of telecom operators’ revenue that Government gets annually, much before the auction.

Vodafone, however, specifically said that the Government should finalise the matter before 27 January. While companies have submitted their applications intending to participate in the auction that starts on 3 February, they have the option to withdraw application on or before 27 January.

Both the companies have written to MF Farooqui, secretary of the Department of Telecommunications (DoT), who is also the chairman of the Telecom Commission. The Telecom Commission, which is the highest decision making authority at the DoT, is currently discussing the matter, and is scheduled to meet on 25 January.

Copies of the letter were also forwarded to other members of the Telecom Commission. Based on the decision of the Telecom Commission, the Empowered Group of Ministers on telecom, headed by finance minister P Chidambaram, will take the final call.

Companies want a final decision on the matter as this would help them work out their bidding strategy in the forthcoming auction, after factoring in the levy that they would need to pay annually for the spectrum that they would buy in the auction.

The issue came under discussion after the Telecom Regulatory Authority of India (Trai) had, in September last year, suggested the adoption of a flat SUC at 3 per cent of AGR of telcos, irrespective of their spectrum holding. However, an internal committee of the DoT has opposed the move, while the TC wanted to take a decision in consultation with the Department of Economic Affairs.

At present, telecom operators pay between 1-8 per cent of AGR depending on their spectrum holding.

Broadband wireless access (BWA) spectrum holders like Reliance Jio opposed the recommendation as it would require paying only 1 per cent of AGR as SUC. Incumbent GSM operators like Bharti Airtel, Vodafone India, Idea Cellular and Uninor have spoken in favour of the move.

One of the key parameters for deciding the new rate of SUC would be maintaining the government’s annual earning from the SUC. In fiscal year 2012-13, the government earned a total of Rs 5,689.88 crore from spectrum levy, an increase of about 10.5 per cent from the Rs 5,148.05 crore earned during the previous fiscal year.