EGoM fails to take final call on one-time fees

Assures to take final decision on pending issues by October 8, 2012

The empowered group of ministers (EGoM) on telecom, headed by Finance Minister P Chidambaram, which met today, failed to take a final decision on the contentious issue of one-time fee on spectrum held by the existing operators.

The EGoM after an hour-long meeting, failed to arrive at a final decision on the one-time spectrum fee. However, the group of ministers assured to take a final call on the issue in October 8, 2012, when they would meet again.

“All the issues were discussed threadbare. We will have another meeting on October 8, when final decisions would be taken,” Telecom Minister Kapil Sibal said after the EGoM meeting.

No decisions had been taken today, he added. However, Sibal assured that decisions on all the pending issues such as one-time fees would be taken by the EGoM by October 8, 2012.

In July, the Cabinet had referred the matter to EGoM for obtaining its view. Later in the month, EGoM had deferred a decision on the matter till the outcome of Presidential Reference.

Following the Supreme Court’s opinion on the Presidential Reference, the government is now free to take a decision in this regard.

DoT had made four proposals to the Cabinet on one-time fee — no charge; levy a one-time fee on all airwaves held by existing telecom companies; impose a fee on airwaves held beyond the start-up spectrum of 4.4 MHz; or levy a fee on airwaves held beyond the contracted spectrum of 6.2 MHz.

Existing players were allocated pan-India permits with 4.4 Mhz of airwaves frequencies at price of Rs. 1,658 crore but new telecom operators will have to pay a minimum of Rs 14,000 crore for 5Mhz of airwaves in the upcoming auction.

Though no decisions had been taken on the one-time fee, the EGoM is understood to have approved the participation of 100% foreign owned telecom entities in the 2G spectrum auction scheduled for November. However, to start operations in India, the players have to form a joint venture with Indian partner. That's because telecom companies can only have 74% foreign direct investment as per law.

The department of telecommunications (DoT) has sought approval from the EGoM on the participation of foreign entities directly in the upcoming 2G auction without any Indian partner. The telecom department wanted a “ratification of amendment to eligibility conditions for participation in the spectrum auction, incorporated in the notice inviting application (NIA).”