Telecom 2g Licence May Cost Rs 10,000 Cr

[Himanshu Singh 19]

Telecom regulator the Telecom Regulatory Authority of India (TRAI) wants the government to revise the existing licence fee of Rs 1,651 crore for pan-India communication services. The regulator is of the view that the existing licence fee of Rs 1,651 crore can no longer be applicable today since this price was discovered in 2001, when the fourth cellular licences were auctioned.

This view has also been endorsed by the finance ministry, which in addition to seeking a revision of the existing licence fee, has also demanded an explanation from the Department of Telecom (DoT) for persisting with the 2001 price.

TRAI has already asked the Department of Telecom (DoT) to revise the current fee of Rs 1,651 crore: “The entry fee as it exists today is, in fact, a result of the price discovered through a market-based mechanism applicable for the grant of licence to the 4th cellular operator in 2001. In today’s dynamism and unprecedented growth of the telecom sector, the entry fee determined then is also not the realistic price for obtaining a licence. Perhaps, it needs to be reassessed through a market mechanism,” Trai has told DoT.

When asked, Mr Misra said the proposed value of a pan-India licence, which comes bundled with a start-up spectrum, could be in the range of Rs 6,000-10,000 crore. At the same time, he emphasised this amount was not based on any calculations done by the regulator. “TRAI has not been given any mandate by DoT to determine the licence fee. This amount is just an estimate to the value of the spectrum,” he added.

DoT is already outlining a mechanism to charge new entrants more for spectrum. As reported first by ET, DoT plans to fix a one-time spectrum fee for all new players who plan to offer second generation (2G) mobile services in the country. This start-up fee, which is expected to run into a few thousand crores, will be in addition to the Rs 1,651-crore entry fee that all new entrants have to pay for a pan-India licence. DoT has also set up a committee to fix the fee for initial 2G spectrum. Put simply, the DoT move implies that the licence will be delinked from spectrum and the existing fee if Rs 1,651 crore is meant only for the licence.

This comes even as players awaiting GSM spectrum to roll out services have demanded that Prime Minister Manmohan Singh intervene to ensure that new entrants are charged lower entry fee to create a level-playing filed.

The regulator also wants telcos to pay a higher part of their revenues for the use of spectrum. In its recent recommendations on this issue, TRAI had said GSM operators must pay a one-time fee of Rs 16 crore per MHz of spectrum allotted to them beyond 10 MHz while also hiking the revenue share to 6% of the operators’ total revenues for allotment of radio frequencies of up to 12.5 MHz, 7% for 15 MHz and 8% for radio frequencies above 15 MHz.

Justifying the move for higher spectrum fees, TRAI said: “The authority noted that in the past few years, the market capitalisation of listed telecom companies has increased manifold, and their operating margins are also going up in line with the world’s competitive telecom markets. The authority also noted the share of listed telecom companies in the total market capitalisation was more than 13% for the period August 1, 2006 to July 31, 2007.

The Authority added the EBITDA margin of listed telecom companies is more than 1.75 times compared with listed IT companies. In the wake of growing demand of spectrum and its limited availability, the authority has revisited the existing spectrum charges to reflect a reasonable market value of allocated spectrum.”

source ET

[copperco2 24]

when it comes to telecom, no cost is too high.