Telecom Ministry seeks to reduce spectrum charges to 3%

Telecom Ministry is expected to approach the Cabinet for its nod to reduce the spectrum usage charges from the existing 5% to 3% of the revenue earned by companies from telecom services.

"The Telecom Commission has agreed to charge SUC (spectrum usage charges) at 3% level of adjusted gross revenue on the spectrum that will be purchased in next round of auction.It will be sent to the Cabinet for final approval," an official source told PTI.

Spectrum usage charges were earlier linked to the quantum of spectrum holding of an operator in the range of 3-8% of their adjusted gross revenue.

After evaluating the impact on the exchequer, the government in January 2014 decided to cap SUC at 5% on the spectrum that was to be procured in the future auction. The SUC collection was at 4.8% level that time.

Existing telecom operators were asked to pay the weighted average of their existing SUC (on old rate of 3-8%), and 5% if they acquire new spectrum.

The Telecom Regulatory Authority of India has recommended that SUC should be charged at a uniform rate of 3% across the industry.

However, the recommendation faced stiff opposition from Reliance Jio which holds a pan India broadband wireless access spectrum on which 1% SUC is imposed.

The government had then asked all BWA holders, including Aircel, Airtel, to continue paying 1% on BWA but they were asked to pay 5% of adjusted gross revenue on all spectrum they will purchase in future.