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Corporate Nov 26, 2012

Telcos petition PM on one-time levy on spectrum

New Delhi: India's top telecom firms Bharti Airtel, Vodafone and Idea Cellular have petitioned Prime Minister Manmohan Singh against the levy of one-time fee on spectrum they hold beyond a prescribed limit, saying that there is no legal basis for its unilateral imposition.

"...there is no justification or legal basis for any unilateral imposition of any additional charges in the form of one-time fee for spectrum held by operators which has been legitimately paid for in the form of higher revenue-share," the three firms wrote in a joint letter to Singh on 19 November.

Spectrum issue. Reuters

The cabinet has recently approved levy of about Rs 31,000 crore as one-time fee on spectrum held by incumbent telecom firms. GSM-based telecom operators such as Airtel, Vodafone and Idea will be asked to pay for airwaves they hold beyond 4.4 Mega-Hertz at an auction-determined price, while CDMA carriers are to pay for holdings beyond 2.5 MHz, for the remaining validity of their permits.

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

The letter, signed by Bharti Airtel CEO (India and South Asia) Sanjay Kapoor, Idea Cellular MD Himanshu Kapania and Vodafone India MD and CEO Marten Pieters, said any charging policy for already allocated spectrum should be carried out through bilateral renegotiations.

"Such bilateral renegotiation of contract may be considered only on prospective basis, where an one-time fee may be offered in return for migration to a uniform rate spectrum charging regime," the letter said.

The operators said imposition of one-time fee violates the licence conditions, which stipulate the chargeable basis for additional spectrum by way of escalating percentage of revenue share as spectrum usage charge.

Citing an agreement between the government and industry in 2002, the telecom firms said the policy of allocation of additional spectrum on subscriber-linked criteria - charging with escalating rate of revenue - has been followed over the last 11 years and has been a win-win situation for both the government and the industry.

"In fact, the government is on record stating that the spectrum charges have increased eighty times over the last decade," it said.

Besides, the firms cited an affidavit filed by the Department of Telecom in TDSAT, which said no spectrum in excess of what is permissible, has been granted to any operator.

"Further, the government averred more than twelve times on the floor of Parliament that the spectrum allocation and charging regime is as per the policy and guidelines of the government," it added.

PTI

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