Auction boost: EGoM fixes 5% usage charge for new spectrum
29 Jan 2014 5:00 AM IST
‘The SUC shall be at rate of 5 per cent on new spectrum. The big players will benefit to that extent, small players will also benefit,’ Telecom Minister Kapil Sibal told reporters after the panel meeting. He added the decision will go to Cabinet for final approval.
Vodafone Resident Director and Assocham’s National Telecom Council Chairman TV Ramachandran expressed disappointment at the decision, saying the rate is higher than the level recommended by the regulator.
Sibal said the government expects the auction to be a huge success after this decision as it lowers the financial burden of big telecom operators such as Bharti Airtel and Vodafone and does not adversely impact new operators. The SUC currently ranges from 3 to 8 per cent for mobile operators.
‘With greater investment in the sector and successful auctions, the consumer will benefit. Successful auction means greater investment in the sector, results in efficiency of service and lowering of tariffs,’ Sibal said.
The Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram decided that existing telecom operators will have to pay the weighted average of their existing SUC and 5 per cent for new spectrum acquired. The SUC is levied annually as a percentage of revenue earned from telecom services. For companies that hold broadband wireless access (BWA) spectrum, such as Reliance Jio Infocomm Ltd and Tikona, the fee is 1 per cent.
The EGoM did not approve the Telecom Regulatory Authority of India’s suggestion for a uniform SUC of 3 to 5 per cent across sectors, which would have increased the charge for BWA holders.
‘We have not made any amendment in any contractual obligations. BWA players will continue to pay 1 per cent SUC and if they acquire new spectrum, they will have to pay 5 per cent,’ Sibal said.
Telecom Secretary MF Farooqui said the decision will have no adverse impact on the government’s revenue.
‘The current levels of revenue will be protected. Operators are having spectrum at different values. When we take weighted average, it stands at 4.8 per cent. Now it will be fixed 5 per cent for new spectrum,’ Farooqui said. He also informed that the much-awaited mergers and acquisitions norms for the sector will be out in a week ‘M&A guidelines shall be published in a week. We have received legal opinion today (Monday) which is being examined,’ Farooqui added. On BWA holders ,He said they will have to report separate revenue flows from existing spectrum and newly acquired airwaves.
‘Industry is disappointed that the SUC has been decided as high as 5 per cent for auctioned spectrum whereas TRAI had recommended 3 per cent. This will further add financial burden on the industry,’ Assocham’s Ramachandran said.
The SUC should have been set at 1 per cent to ensure a level playing field with holders of BWA spectrum, he said.
‘The decision on SUC is marginally useful for the industry,’ Rajan S Mathews, Director General of the Cellular Operators Association of India , said. ‘The EGoM’s decision to charge 5 per cent for all the new spectrum is way too high than the global average SUC of 1 per cent.’
Idea Cellular Q3 profit doubles to Rs 468 crore
MUMBAI: Country’s third largest telecom operator Idea Cellular on Monday said that its consolidated net profit has more than doubled to Rs 467.73 crore for the quarter ended 31 December, 2013, driven by strong growth in mobile data revenue. This is against a net profit of Rs 228.57 crore registered in the same period last year.The company’s revenues grew 18.5 per cent to Rs 6,613.1 crore in the reported quarter from Rs 5,578.6 crore in the year-ago period. Idea said the consolidated profit includes contribution of Rs 69.6 crore from Indus Towers. The company added 18 million incremental subscribers (on VLR) in calendar year 2013 taking its total userbase to 129 million subscribers. The ARPU increased to Rs 169 from Rs 158 in Q3 FY’13. The overall mobile data users base fell to 25.5 million (2G and 3G) as the company stopped reporting incidental data users. However, mobile data average revenue per user (ARPU) improved to Rs 91 in Q3 FY’14 as compared to Rs 52 in Q3 FY’13.
Vodafone Resident Director and Assocham’s National Telecom Council Chairman TV Ramachandran expressed disappointment at the decision, saying the rate is higher than the level recommended by the regulator.
Sibal said the government expects the auction to be a huge success after this decision as it lowers the financial burden of big telecom operators such as Bharti Airtel and Vodafone and does not adversely impact new operators. The SUC currently ranges from 3 to 8 per cent for mobile operators.
‘With greater investment in the sector and successful auctions, the consumer will benefit. Successful auction means greater investment in the sector, results in efficiency of service and lowering of tariffs,’ Sibal said.
The Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram decided that existing telecom operators will have to pay the weighted average of their existing SUC and 5 per cent for new spectrum acquired. The SUC is levied annually as a percentage of revenue earned from telecom services. For companies that hold broadband wireless access (BWA) spectrum, such as Reliance Jio Infocomm Ltd and Tikona, the fee is 1 per cent.
The EGoM did not approve the Telecom Regulatory Authority of India’s suggestion for a uniform SUC of 3 to 5 per cent across sectors, which would have increased the charge for BWA holders.
‘We have not made any amendment in any contractual obligations. BWA players will continue to pay 1 per cent SUC and if they acquire new spectrum, they will have to pay 5 per cent,’ Sibal said.
Telecom Secretary MF Farooqui said the decision will have no adverse impact on the government’s revenue.
‘The current levels of revenue will be protected. Operators are having spectrum at different values. When we take weighted average, it stands at 4.8 per cent. Now it will be fixed 5 per cent for new spectrum,’ Farooqui said. He also informed that the much-awaited mergers and acquisitions norms for the sector will be out in a week ‘M&A guidelines shall be published in a week. We have received legal opinion today (Monday) which is being examined,’ Farooqui added. On BWA holders ,He said they will have to report separate revenue flows from existing spectrum and newly acquired airwaves.
‘Industry is disappointed that the SUC has been decided as high as 5 per cent for auctioned spectrum whereas TRAI had recommended 3 per cent. This will further add financial burden on the industry,’ Assocham’s Ramachandran said.
The SUC should have been set at 1 per cent to ensure a level playing field with holders of BWA spectrum, he said.
‘The decision on SUC is marginally useful for the industry,’ Rajan S Mathews, Director General of the Cellular Operators Association of India , said. ‘The EGoM’s decision to charge 5 per cent for all the new spectrum is way too high than the global average SUC of 1 per cent.’
Idea Cellular Q3 profit doubles to Rs 468 crore
MUMBAI: Country’s third largest telecom operator Idea Cellular on Monday said that its consolidated net profit has more than doubled to Rs 467.73 crore for the quarter ended 31 December, 2013, driven by strong growth in mobile data revenue. This is against a net profit of Rs 228.57 crore registered in the same period last year.The company’s revenues grew 18.5 per cent to Rs 6,613.1 crore in the reported quarter from Rs 5,578.6 crore in the year-ago period. Idea said the consolidated profit includes contribution of Rs 69.6 crore from Indus Towers. The company added 18 million incremental subscribers (on VLR) in calendar year 2013 taking its total userbase to 129 million subscribers. The ARPU increased to Rs 169 from Rs 158 in Q3 FY’13. The overall mobile data users base fell to 25.5 million (2G and 3G) as the company stopped reporting incidental data users. However, mobile data average revenue per user (ARPU) improved to Rs 91 in Q3 FY’14 as compared to Rs 52 in Q3 FY’13.
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