Telcom operators would be saving about Rs 5,500 crore each year as the telecom reform package of last year did away with the spectrum user charge (SUC).

Analysts said the savings on the spectrum and lower base price helped the telcos to bid for radiowaves more than what was estimated in the latest 5G auctions. Though there will be a tariff hike to compensate for extra spending in the auction, the amount will be less as the SUC has been done away with.

Telecom operators Bharti Airtel, Reliance Jio and Vodafone Idea will collectively make annual savings of Rs 5,592 crore this fiscal onwards on account of a lower spectrum usage charge (SUC), they estimated.

Under the new policy announced by the government in September 2021, spectrum acquired in the recently concluded auction and even the future ones will not attract any usage charge. ICICI Securities estimates effective SUC rates (including on microwave spectrum) for Airtel, Jio and Vi would drop sharply from the pre-5G auction levels of 4.1 per cent, 3.6 per cent and 3.8 per cent of adjusted gross revenue (AGR) to around 1.2 per cent, 0.7 per cent and 1.5 per cent of AGR, respectively.

The brokerage’s future SUC estimates for telcos are based on actual payouts in Q4FY22 and factors in new airwaves acquired in the recent 5G auction and current microwave spectrum holdings.

“Going forward, annual SUC savings for Airtel, Jio and Vi have been estimated at Rs 2,236 crore, Rs 2,432 crore and Rs 924 crore respectively,” ICICI Securities said.

It added that the savings on the SUC score would be visible from the September quarter, FY23. JP Morgan estimates annual cost savings of Rs 3,000- 4,000 crore for Airtel and Jio and Rs 1200-1,500 crore for Vi over FY23-25 due to the reduced spectrum usage charge following the latest 5G spectrum purchases. Reliance Jio Infocomm emerged as the highest bidder at the auction grabbing nearly half of the airwaves that were on sale.