EGoM decides on 5 percent spectrum usage charge for new spectrum

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EGoM decides on 5 percent spectrum usage charge for new spectrum
Telecommunications companies that are all set to bid for spectrum in the upcoming February 3 auction will need to pay five percent of their annual gross revenue as spectrum usage charge (SUC), an Empowered Group of Ministers (EGoM) decided in New Delhi on Monday.

"For all new spectrum which will be sold, it will be five percent but it will be charged at weighted average," Telecom Minister Kapil Sibal told news persons after the meeting. The decision will now go to the union cabinet for its final nod.

The SUC for broadband wireless access (BWA) spectrum will continue to remain at one percent, Sibal said. He added that "ultimately it is consumers who need to benefit".

At a meeting held by the Telecom Commission on Saturday, three options for SUC three percent with weighted average, five percent with weighted average and continuing with the current charge were discussed.

The SUC is levied annually as a percentage of revenue earned by telecom companies, which varies from 3-8 percent. The Telecom Regulatory Authority of India TRAI had earlier suggested a uniform 3-5 percent fee from April 1 across the telecom services for a successful next round of spectrum auction.

(Also see: TRAI reiterates spectrum auction proposal to cut base price by 60 percent)

In 2012-13, the government's revenue collection from SUC was Rs. 5,689 crores.

Eight telecom service providers have applied to take part in the second generation (2G) spectrum auction due February 3.

(Also see: Eight telecom operators apply for February 3 spectrum auction)

The companies are Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone, Telewings, Aircel, Tata Teleservices and Idea Cellular.

The total spectrum to be put on auction is 46MHz in 900MHz band and 403.2MHz in 1800MHz band.

The government expects to mop up Rs. 40,874.50 crores from this spectrum auction.

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