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26-Jul2016

Telecom Commission stick to its weighted average formula for spectrum with a minimum levy of 3%

The inter-ministerial Telecom Commission the highest decision-making body of the department of telecommunications refused to budge and recommended a weighted average formula for spectrum held by mobile operators with a minimum levy of 3 per cent, adding a condition that the annual charges for any operator will not fall below 3 per cent for the weighted average calculation.

Telecom Commission stood on its earlier recommendation of weighted average formula for all bands for overall level playing field and to do away with arbitrage and revenue shortfall. It has decided to fix a minimum rate of three per cent of a company's adjusted gross revenue as SUC, in a bid to move towards a uniform rate for all players. For new spectrum auctions, a flat rate of three per cent will be charged, for the remaining airwaves the weighted average method will apply. The decision will be placed forward for the approval of cabinet next week after which a notice inviting application (NIA) will be issued. After the issuance of the NIA, spectrum auction is likely to start in 45 days.

The SUC issue became complex due to a difference in rates for the 2,300 megahertz (Mhz) band and other bands. SUC for the 2,300 Mhz band is one per cent while it is higher for other bands. The annual revenue for the government from SUC will go up if the Telecom Commission proposal is approved by the cabinet. Currently, the total annual SUC collection is Rs.7,500 crore. The government expects to garner Rs 5.66 lakh crore at base price from the spectrum auction, the biggest ever. The new formula will ensure that there is a minimum 3% floor rate for payment of SUC, but without making any significant changes to the 2,300 MHz rate.



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