Telcos' shares edge higher on lower spectrum usage charge

Telecom stocks gained up to 3.4% after the inter-ministerial panel Telecom Commission backed lowering of spectrum usage charge to 3% of their annual revenue from next auction. 

Shares of Reliance Communications jumped 3.4% to Rs 50.05 and Bharti Airtel climbed 2.73% to Rs 358.70 on BSE. 

Idea Cellular rose by 1.28% to Rs 106.70. 

In what could be good news to mobile operators, the inter-ministerial panel Telecom Commission has backed lowering of spectrum usage charge to 3% of their annual revenue. The panel also decided that the payout for carriers in any case will not be lower than what they are currently paying at the existing rate to prevent loss of revenue to the government.

"For future auction, the Telecom Commission stood by its earlier recommendation to levy 3% SUC," an official source had said. 

The Telecom Regulatory Authority of India (Trai) has recommended SUC at a uniform rate of 3% across the industry and gradually bringing it to 1%. 

The government in January 2014 decided to cap SUC at a flat 5% for spectrum that was to be procured in future auctions. 

At that point, telecom operators were asked to pay the weighted average of their existing SUC (on the old rate of 3-8 per cent) based on the quantum of spectrum they hold and 5 per
cent if they acquire new spectrum.