Officials said the rationale behind lowering SUC was to ensure higher revenue receipts from the auction “since the price of the airwaves is the net present value along with spectrum use fee, which operators will keep paying”.
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Bharti Airtel gained as much as 2.5 per cent, while Reliance Communications and Idea Cellular were up around 2.5 per cent and 0.5 per cent respectively.
Calling it a win-win situation, the government official said that while on one hand, the decision does results in lower SUC for companies, while protecting the government’s revenues.
Government revenue may take a hit: The government is likely to target raising $25 billion or Rs 1,66,762.5 crore from the upcoming spectrum auctions, according to Credit Suisse.
Also, for Airtel, it will fall from 4.9 percent to 3.74 percent, they said.
Before 2010, there was only 2G spectrum and hence, calculation of revenue was easy.
According to analysts, it is hard to segregate revenues earned from BWA and other spectrum bands.
Reuters report quoting a prominent business daily said the spectrum usage fee for all the airwaves owned by Bharti Airtel will fall to 3.74 per cent from 4.9 per cent of revenue now.
The SUC has been one of most contentious issues of late.
The Telecom Regulatory Authority of India (Trai) had recommended a uniform SUC of 3% but the recommendation faced stiff opposition from Reliance Jio.
For BWA spectrum holders like Reliance Jio, Airtel and Aircel, the same method was put in place, considering 1 percent SUC on airwaves held by them in 2300 Mhz band.
While the Cellular Operators Association of India (COAI) appreciated the move to lower SUC for future auctioned spectrum, it said different rates for BWA radio waves could leave a scope for arbitrage.
At that point, telecom operators were asked to pay the weighted average of their existing SUC (on the old rate of 3-8 per cent) based on the quantum of spectrum they hold and 5 per cent if they acquire new spectrum.
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The companies that do not procure spectrum in future auctions will continue to pay the existing rate.
