DoT to hike spectrum usage fees: report

Nicole McCormick
01 Mar 2010
Daily News

Indian mobile operators will face up to 50% higher spectrum usage fees (SUF) from April 1, Indian press has reported.

The Department of Telecommunications (DoT) plans to slap the SUF increase on all operators irrespective of the spectrum they have been allocated.

In contrast, the regulator TRAI was advocating that spectrum fees be increased only for operators with spectrum of 6.2Mhz per circle or higher.

Under the changes, a new GSM operator with up to 4.4Mhz in a telecom region will pay 3% of annual gross revenues (AGR) in SUF starting April, up from 2% currently.

The latest hike is the second time in just over 12 months that the DoT has upped usage charges.

SUFs were raised one percentage point for spectrum up to 8 Mhz from January 1 2009, while spectrum allocated above 8 Mhz was hiked two points.

Operators currently pay between 2%-6% of revenue in SUF.

Reports in January said a fee hike of up to 2% could boost the government’s coffers by over $400 million.

The SUF increase spells more bad news for operators caught in a fierce tariff war.

Market leader Bharti Airtel has been particularly hard hit by the price war, with its December quarter ARPUs falling 9% quarter on quarter, while mobile revenue was down 2%.

The SUF increase also has implications for 3G aspirants.

Incumbent operators have to pay an additional 1% of their AGRs in SUFs.

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