Panel recommends extra surcharge for mobile operators

NEW DELHI Thu Oct 18, 2012 10:10pm IST

The sun rises behind a communications tower in New Delhi March 20, 2006. REUTERS/B Mathur/Files

The sun rises behind a communications tower in New Delhi March 20, 2006.

Credit: Reuters/B Mathur/Files

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NEW DELHI (Reuters) - Long-established mobile phone operators that were not affected by the scandal-hit sale of airwaves that hurt their newer counterparts should pay a retrospective fee for part of their airwave holdings, a ministerial panel recommended.

This is in addition to another surcharge totalling at least $5 billion recommended by the same panel earlier this month, and will put extra burden on carriers including Bharti Airtel (BRTI.NS) and Vodafone's (VOD.L) local unit.

The panel recommended on Thursday a surcharge should be imposed on operators holding second-generation airwaves beyond 6.2 mega hertz for four years to 2012, two senior government officials told reporters.

Earlier it had recommended that all operators pay a surcharge from next year f or their airwave holdings above 4.4 mega hertz for the remaining period of their permits based on the price determined by an forthcoming auction.

The good news for the companies, however, is that the panel recommended the retrospective surcharge be indexed to the 2001 price of spectrum, and not to the auction, whose starting price is more than seven times the 2001 price.

The cabinet has the final say on the surcharges.

The airwaves auction, which is due to begin on November 12, is the result of the Supreme Court revoking permits issued in an scandal-tainted auction in 2008. Companies like Bharti and Vodafone India were not affected by that court order as they already held airwaves.

The government is hoping to raise 400 billion rupees from the auction. It has set the auction base price at 140 billion rupees for 5 mega hertz of 2G airwaves in the 1800 mega hertz band for all of India's 22 telecoms zones.

By comparison, carriers paid 16.58 billion rupees for 4.4 mega hertz of airwaves bundled with their permits in 2008 and the same price in 2001. The Comptroller and Auditor General (CAG) has criticised the 2008 sale price as "unbelievably low".

Separately, Telecoms Minister Kapil Sibal said the panel on Thursday put off a decision on reallocating airwaves and will decide on it at least a week before the start of the auction, scheduled to begin on November 12.

The Telecom Commission on Wednesday recommended that mobile phone carriers give up all their airwave holding in the superior 900 mega hertz band at the time of their permit renewals, a move opposed by the industry, which it says will cost about $24 billion more in capital outlay.

(Reporting by Devidutta Tripathy and Aradhana Aravindan; Editing by Helen Massy-Beresford)

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