Hefty fine likely on existing telcos

Incumbent telcos, who have won spectrum in the auction conducted in November 2012, will be imposed with financial penalty if they fail to roll out on time prescribed by the Department of Telecommunications (DoT).

The companies include Bharti Airtel, Vodafone India and Idea Cellular.

If a company fails to roll out on time, it would have to pay Rs 5 lakh per week for the first 13 weeks of delay, Rs 10 lakh per week for the next 13 weeks and thereafter, and Rs 20 lakh per week for 26 weeks subject to a maximum of Rs 7 crore, according to a recent communication.

For delay more than 52 weeks, the companies will have to surrender the spectrum, in addition to the financial penalty.

The companies will have to pay 3 per cent of adjusted gross revenue (AGR) as the spectrum usage charges for spectrum up to 4.4 MHz under the 1800 MHz band, while it would be 4 per cent for spectrum up to 6.2 MHz, 5 per cent for spectrum up to 8.2 MHz, 6 per cent for spectrum up to 10.2 MHz, 7 per cent for spectrum up to 12.2 MHz and the spectrum usage charge would be 8 per cent of ARG for airwaves held up to 15.2 Mhz.

As per the communication, companies will have to cover at least 10 per cent of the Block Headquarters (BHQs) of the licenced service area by the end of three years from the effective date of Licences or date of allotment of spectrum won in the auction process, whichever is later. An additional 10 per cent of the BHQs of the licenced service area shall be covered in each of two subsequent years. This means, companies will have to cover at least 20 per cent and 30 per cent of BHQs in the fourth and fifth year respectively.

The minimum AGR would not be less than 5 per cent of the bid amount, as per the discussion. If the actual spectrum charge is lower than the minimum AGR, the higher amount would be applicable.