Cabinet approves 5% SUC on new airwaves acquired in auction

The government has approved charging telecom firms 5% of their revenue as spectrum usage charge (SUC) for new airwaves to be auctioned next month, a move aimed at improving bidding sentiment.

The Cabinet at its meeting yesterday approved the rates for new spectrum.

It also said the companies that do not bid in the auction will continue to be charged at existing rates varying from 3 to 8%.

"The spectrum acquired in the current auction will be charged at 5% of the AGR (Adjusted Gross Revenue). In cases of combination of existing spectrum in this band and spectrum acquired through the auction, the weighted average will apply to all the spectrum held by the operator in 900 MHz and 1800 MHz band," a government statement said.

The statement said licensees who do not acquire spectrum in this auction shall continue to pay SUC according to the existing slab rate.

The charge is levied annually by the government as a percentage of revenue earned from telecom services.

It currently ranges from 3 to 8% for mobile operators and 1% for firms with Broadband Wireless Access (BWA) spectrum such as those of Reliance Jio Infocomm Ltd and internet service provider Tikona.

The rate for BWA has been kept unchanged. "In respect of BWA spectrum acquired through auction in 2010, SUC will continue to be charged as per present practise, and the operator would be required to report the revenue earned from BWA spectrum separately," the statement added.

Cabinet noted that as a matter of policy, it is desirable to move to a flat rate of SUC and adoption of a weighted average would provide a path for such transition.

"As 800 MHz spectrum is not being auctioned in the forthcoming auction and the recommendation of the Telecom Regulatory Authority of India (TRAI) has been sought for the reserve price, the decision in respect of Code Division Multiple Access (CDMA) spectrum will be taken at an appropriate time,' it added.

TRAI in its recommendations had suggested a uniform fee of 3-5% from April 1 across telecom services for the success of the next round of spectrum auction.