Govt increases spectrum charges for GSM, CDMA operators

[Mr.Bhat]

Government increases spectrum charges by up to two percentage points of Adjusted Gross Revenue of telecom operators with effect from April 1.


Details awaited

[Mr.Bhat]

In a development that would hit telecom operators' profits, the government on Friday announced an up to 50 per cent increase in spectrum charges for all GSM and CDMA technology based service providers.

The increased spectrum charges would be effective April, this year, according to an official order/notification.

Telecom service providers have to pay a percentage of their adjusted gross revenue (AGR) to the government as spectrum usage charge. This charge depends on the quantity of spectrum allotted.

The new charges vary between 3-8 per cent depending upon the quantum of airwaves held by the respective operators.

As per the new charge, an operator holding spectrum up to 4.4 Mhz will be paying 3 per cent of the AGR compared to 2 per cent now.

Most of the incumbent players other than those who got licences in January 2008 are having more that 4.4 MHz of spectrum.

Similarly, for CDMA players with spectrum up to 5.0 Mhz will now have to pay 3 per cent of their AGR as spectrum charge instead of two per cent earlier.

The increase in spectrum charges will put pressure on the profits of the telecom operators who are already struggling to protect their revenues in the wake of intense competition due to entry of new operators in the field.

For GSM operators having spectrum upto 8.2 Mhz spectrum the charges will now go up from 4 per cent to 5 per cent and for spectrum up to 10.2 Mhz operators have to shell out 6 per cent of their AGR instead of earlier 4 per cent.

The operators with spectrum up to 10.2 Mhz as the increase in charge is 50 per cent in this category.

Similarly, for a CDMA player having spectrum up to 10 Mhz will be impacted more as the charges increased by 50 per cent from earlier 4 per cent to 6 per cent now.

For GSM players having spectrum up to 12.2 Mhz will now have to pay 7 per cent of their AGR as the charge instead of earlier 5 per cent and for having spectrum up to 15.2 Mhz they now have to pay a whopping 8 per cent of their AGR in place of the the existing 6 per cent levy.

The document further said that the spectrum charges would be for complete service area (not city wise) for wireless access system and would include the royalty for spectrum as well as licence fee for base stations and subscriber's terminal.

It further added that the service providers will have to pay interest and penalty for delayed payments as per the existing orders.

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