Spectrum fee only from cell ops

THE government plans to exempt all revenue streams of cellphone operators other than income from mobile services while calculating spectrum charges, which may help companies such as Bharti Airtel, Reliance Communications and Idea Cellular save hundreds of crores of rupees. 



    All telcos pay between 2% and 6% of their total annual revenues towards spectrum usage charges, depending on the area of operation. Spectrum or radio frequencies are the airwaves on which all communication signals travel. This resource is currently allocated to telcos based on their subscriber figures. 



    Currently, all revenues, including earnings from fixed deposits, interest on savings, land rentals, lease of equipment, sharing of towers, foreign exchange gains, dividend and capital gains, are taken into account while calculating revenue. The only exemption is revenue from fixed-line operations. 



    The change in norms will mean that telcos will not have to pay up to 6% of their annual revenues from non-mobile related services to the government. Executives with telcos say this will lead to about 15% savings on the spectrum levy. Back-ofthe-envelope calculations put annual benefits for mobile service providers from the move at more than Rs 600 crore. Similar licence fee demand 



ACCORDING to telecom regulator Trai’s estimates, the government will rake in over Rs 4,000 crore as spectrum charges this fiscal. India’s largest telco Bharti Airtel will contribute a third of this Rs 4,000 crore spectrum fee. This means, the savings for Bharti alone could be just under Rs 200 crore in the current fiscal. However, this will not lead to any loss of revenue for the government, as Indian telcos add over 140 million mobile customers annually. Spectrum usage charges paid by the telecom firms grow 15-20% every year. 



    A DoT internal note, a copy of which is available with ET, says changes in existing regulations are justified because revenues from non-mobile related activities are “earned without using wireless spectrum”. The note also adds that the government must include safeguard clauses while changing the current norms, so that telcos do not claim this relief with retrospective effect. This comes after a section of the DoT warned that if telcos were to claim this relief from 2003 onwards, it would result in considerable losses to the exchequer. 



    DoT is also concerned that any changes in the method of calculating spectrum charges will result in operators demanding similar relief in licence fee structure too. All telcos pay 6-10% of their annual revenues towards licence fee depending on the area of operations. In Delhi, for instance, the licence fee is 10% of the telco’s annual revenues, while in Bihar it is 6%. The states in the country are classified into three categories based on their revenue earning potential. 



    In August 2007, telecom tribunal TDSAT had ruled that income from dividend and interest on savings, capital gains and benefits from foreign exchange be exempted while calculating licence fee. But these benefits were never extended to operators since the DoT appealed the TDSAT ruling in the Supreme Court and managed to obtain a stay order. 



    The country’s highest court is yet to pass a judgment on this issue. The department of telecom note also adds that steps should be taken to ensure that concessions on spectrum fee calculations do not hurt the government’s revenues till the Supreme Court rules on the issue.