Spectrum: Rs 40,550 cr loss seen if cos charged only prospectively

New Delhi: The Department of Telecom (DoT) is keeping its cards close to its chest on whether it would charge incumbent telcos for excess spectrum prospectively or with retrospective effect. But it has got some free advice from a Member of Parliament.

Telegu Desam MP Gundu Sudha Rani has written to the Prime Minister, objecting to any move by the DoT to charge telcos prospectively for “excess spectrum”.

She has said if these companies are charged in future and not for the spectrum they have held for years, the government stands to lose a whopping Rs 40,550 crore!

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The letter has been forwarded by the Prime Minister’s Office to the Telecom Ministry. On the face of it, DoT is awaiting clarity on the Presidential Reference before taking a call on many sensitive topics related to spectrum allocation and auctions, including the issue of charging incumbents.

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But since the MP says that she has learnt about DoT’s intention to charge telcos only prospectively, does this mean a decision has been taken quietly and the Communications Ministry is simply waiting for the right time to announce it?

As per a copy of the letter reviewed by Firstpost, the MP has said, “The present proposal by DoT to charge excess spectrum prospectively is another step by the DoT towards continued arbitrariness, misuse of its powers in allotment of natural resources like spectrum and enrichment of some of the telecom operators at the cost of the Government.”

The MP has based her calculations on the spectrum base price of Rs 14,000 crore for 5 mhz. While forwarding the letter to Communications Minister Kapil Sibal, the PMO has asked him to take “appropriate action”. In her letter, the MP pointed out that the Comptroller & Auditor General had pointed out in the its report on 2G spectrum allocation that the allotment of 150 MHz of excess spectrum to the operators without any fees had led to a loss of Rs 36,993 crore to the exchequer.

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Rani also said that eight mobile operators are holding additional spectrum free of cost for over a decade due to lack of proper policy and guidelines: Bharti Airtel, Vodafone, Idea, Reliance Communications, Aircel, Loop and two state-owned firms BSNL and MTNL.

In all, these operators owe Rs 54,000 crore to the government, based on revised base price for 2G spectrum recently as excess spectrum charges, including interest on delayed payment at a simple rate of 12 percent per annum as recommended by the Empowered Group of Ministers (EGoM) on telecom for the deferred payment of spectrum charges. But if these charges were calculated prospectively, then these operators would have to pay just Rs 13,000 crore, she said.

In February this year, media reports had suggested that the government was considering whether to charge one-time fee for excess spectrum on a prospective basis. Citing a presentation made by the DoT, these reports suggested that one of the DoT’s recommendations was that the spectrum already allotted from 4.4 to 6.2 MHz and from 2.5 to 5 MHz in GSM and CDMA bands, respectively, may be charged prospectively.

Spectrum already allotted beyond 6.2 MHz/5 MHz in GSM/ CDMA bands may also be charged prospectively. This proposal was at variance with an earlier move when the government was looking at charging a one-time fee for the extra spectrum beyond the contracted limit of 6.2 MHz from the date of allocation.

This would have put a huge financial burden on the old GSM operators. As expected, Bharti, Vodafone and Idea have been opposing any such move saying this spectrum was taken by them as per their licence conditions and as per the policy of the day.

The one-time fee was recommended by regulator TRAI and the amount was computed by experts, the presentation said. The Telecom Regulatory Authority of India (Trai) had recommended that each MHz of additional spectrum, after the 6.2 MHz limit held by operators should cost a one-time Rs 4,571.87 crore (all-India).