The Union Cabinet on Thursday approved the recommendations by the Empowered Group of Ministers (EGoM) regarding the charging of spectrum currently held by the incumbent telecom service providers (TSPs) and in the event of spectrum sharing and intra service area merger.
The cabinet stated that no one time charge be levied for spectrum holding upto 4.4 MHz (GSM), while for all spectrum holdings beyond 4.4 MHz (GSM) a one time charge be levied prospectively upon the existing operators at 2012 auction determined price.
The date of applicability of the charge shall be the date of commencement of the first quarter following the date of the Cabinet decision.
The cabinet also added that for spectrum held above 6.2 (GSM), a one-time charge would be levied from July 2008 onwards.
"There will be two prices. The price, pro-rated for the period July 2008 upto the date of applicability of auction determined price, would be the 2001 entry fee divided by 6.2, duly indexed using State Bank of India Prime Lending Rate (SBI PLR)," stated the Cabinet headed by Prime Minister Manmohan Singh.
"With effect from the date of commencement of the first quarter following the date of the Cabinet decision the auction determined price would be levied."
The Cabinet also noted that licensees will be given the option to surrender spectrum beyond 4.4 MHz (GSM) if they do not wish to pay this charge.
"The licensees will be allowed equated annual instalments for the balance number of years of license (such that the last instalment is payable not later than 12 calendar months prior to expiry of the license) considering interest rate @ 9.75% as approved by the Ministry of Finance in the case of new successful bidders for deferred payment."
"The licensees will also have the option of full upfront payment or pre-payment of one or more instalments."
Regarding sharing of spectrum and intra service area merger, the cabinet said that sharing of the spectrum, without any additional one-time spectrum charge, will be permitted between TSPs that have both paid for spectrum beyond 4.4 MHz (GSM) as recommended above without any change in the terms and conditions of licence for use of spectrum including the carrier size indicated therein.
"Both TSPs would have to pay spectrum usage charges at the slab rate applicable on the entire combined spectrum holding."
It asserted, "Where a transferor (acquired) company holds spectrum against the entry fee paid, the transferee (acquiring) company (i.e., resultant merged entity), would be required to pay to the Government, the differential between the entry fee, and the current auction determined price, on a pro-rata basis for the remaining period of validity of the license(s)."
On the issue of allotment of the initial spectrum to licensees who have paid the requisite fee but have not been allotted spectrum so far, the Cabinet decided that the claim of such company for allotment of 4.4 MHz of spectrum in such case will be considered after completion of the auction process, subject to availability of spectrum.
The above decisions are expected to result in further efficient utilization of the scarce natural resource of spectrum facilitating proliferation of telecom services in the country, the Cabinet said.
"The decision regarding charging for CDMA spectrum holding beyond 2.5 MHz will be taken separately."