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Climax of spectrum saga may raise rates.

MOBILE phone tariffs are likely to go up in the coming months with the Cabinet on Thursday approving the levy of a one- time fee on spectrum held by telecom companies like Bharti Airtel and Vodafone India. The decision is intended to raise around ` 31,000 crore for the exchequer. Companies, which are already reeling under huge debt, are expected to pass on the burden of the fee to consumers.

Finance minister P. Chidambaram said that the Cabinet has accepted an empowered group of ministers' ( EGoM) recommendations that mobile phone companies be charged a one- time fee for the excess spectrum they own beyond a cap set by the telecom regulator. The EGoM had recommended one- time fee for GSM telecom companies holding spectrum beyond 4.4 MHz and 2.5 MHz for CDMA players.

There are no bidders for auction of CDMA spectrum after Videocon and Tata Teleservices withdrew from the race.

Telecom minister Kapil Sibal said that operators will have to pay two set of charges: prior to January 1, one price and later, an auctiondetermined price will be levied for rest of the licence period.

As per Department of Telecommunications estimates, if the spectrum is sold at minimum price fixed by it, the government will get ` 30,927 crore from one- time fee. This estimate includes around ` 5,900 crore from CDMA players having spectrum beyond 2.5 Mhz. Sibal hoped that his ministry's calculations of garnering about ` 31,000 crore from the surcharge would be met.

Operators were given licence for ` 1,658 crore in 2008, which also included initial allocation of 4.4 Mhz spectrum, and promise of additional 1.8 Mhz-- amounting to total of 6.2 Mhz-- after acquiring certain number of customers.

GSM operators holding more than 6.2 MHz of spectrum will pay a retroactive fee for the airwaves from July 2008 till end of this year.

The price would be the 2001 The move to impose held by companies entry fee duly indexed using State Bank of India Prime Lending Rate divided by 6.2.

Airtel chief executive officer Sanjay Kapoor said, " The current call tariffs do not even cover marginal costs for most operators. So, from an economics perspective, do we need to increase prices? The answer is yes," he said on the sidelines of the World Economic Forum on India summit in Gurgaon.

Cellular Operators Association of India's director general Rajan S. Mathews said that the decision violates licence conditions.


THE Supreme Court ( SC) has sought the government's response on telecom companies seeking auction of the entire spectrum which was available for reallotment after the cancellation of 122 2G licences. A Bench presided over by Justice G. S. Singhvi asked the government counsel to respond by Friday to the claim that only 271 MHz is being auctioned with 160 MHz being retained.

Telecom companies said that the government should auction the entire spectrum and not hoard resources.

They contended that the apex court had directed reallotment of the entire spectrum through auction after cancelling the licences. Mail Today Bureau

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Publication:Mail Today (New Delhi, India)
Date:Nov 9, 2012
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