The department of telecommunications (DoT) has dropped the minimum levy on spectrum usage, which is now at 3 per cent of adjusted gross revenue.
The DoT has waived away spectrum usage charge (SUC) on 5G spectrum, but the operators said this is of no use as long as minimum SUC remained as they would have pay more on their existing holdings.
The government, in an order, said SUC would not be charged for spectrum acquired through auctions held after September 15, 2021, in different access bands.
“The weighted average of SUC rates across all spectrum assigned to an operator (whether assigned administratively or through auction or through trading) in all access spectrum bands, including broadband wireless access spectrum in 2300MHz/ 2500 MHz band acquired in 2010 auction, shall be applied for charging SUC,” said the DoT in the order.
The weighted average is to be derived by a sum of the product of spectrum holdings and applicable SUC rate divided by total spectrum holding.
“The weighted average rate should be determined operator-wise for each service area,” it said. SUC is levied at differential rates on spectrum acquired through auctions since 2010.
A weighted average of spectrum holding and rates is considered for calculation. The SUC is then imposed as a percentage of adjusted gross revenue subject to a minimum of three per cent.
This rate has now been dropped in the latest order. Airtel, Jio and Vodafone Idea paid SUC at a rate of 3.6- 3.7 per cent of total adjusted gross revenue in the fourth quarter FY22. Nomura Global Markets Research in a report last week said the pan-India 100 MHz spectrum in the 3,300 MHz band would entail around Rs 2800 crore annual spectrum outgo for 20 years.
Telcos can also make full or a part upfront payments to reduce the overall outlay on the spectrum. Further, the scrapping of SUC for future spectrum auctions could lead to Rs 3,000 crore in annual cost savings for Reliance Jio and Bharti Airtel and Rs 1400 crore for Vodafone Idea in the longer term, it said.
