Department of Telecom to calculate one-time spectrum fee afresh after auction - Angel Broking

The Department of Telecom is planning a re-calculation of the one-time spectrum charge, which has been estimated at about Rs. 25,000cr, to be levied on telecom operators after completion of next round of auction. One spectrum fee is the charge operators have been asked to pay for holding additional spectrum. Initially, telecom firms were given 4.4MHz spectrum along with license for Rs. 1,658cr for pan-India operations. They were entitled to get another 1.8MHz on fulfillment of certain subscriber-base conditions. Most of the operators were allocated additional spectrum without paying any upfront charges for it. In November last year, the government decided that operators should pay for holding spectrum above 6.2MHz retrospectively, from July 2008 to January 1, 2013 based on market determined price decided in auction. Besides, for spectrum above 4.4MHz operators would have to pay for the period between January 2013 and the expiry of licenses. The rule applied to CDMA players like Reliance Communications, Tata Teleservices for spectrum above 2.5MHz. In its earlier estimates, DoT had included price of spectrum in four cities - Delhi, Mumbai, Kolkata and Rajasthan - based on reserve price fixed by government as there were no bidders. DoT issued demand notice to companies in January but no amount has been recovered yet as most of the telecom service providers have challenged the order before courts and the matter is now sub-judice. GSM operators were asked to pay total of about Rs. 23,177cr and CDMA operators were jointly asked to pay ~Rs. 3,000cr.

We curretly maintain our Neutral rating on the Indian Telecom sector.

Source : Equity Bulls

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