New Delhi, November 8
In a decision that is bound to strain revenues of telecom operators in the country, the Union Cabinet today cleared charging of one-time fee for the excess Spectrum held by incumbent operators. The decision is likely to bring in around Rs 31,000 crore to the national exchequer.

The Cabinet also cleared a proposal for change in funding arrangement for the Universal Service Obligation Fund (USOF) schemes, while putting on hold the draft pharmaceutical pricing policy that aims at increasing the number of essential medicines under price control from 74 to 348.

Briefing reporters after the meeting chaired by Prime Minister Manmohan Singh, Finance Minister P Chidambaram said the Cabinet approved the recommendation of an Empowered Group of Ministers that GSM-based telecom operators be asked to pay for airwaves they hold beyond 4.4 MHz at an auction-determined price, while CDMA carriers pay for holdings beyond 2.5 MHz, for the remaining validity of their permits.

The move may hit market leaders Bharti Airtel and Vodafone the most. Other operators would also be impacted by the decision that may result in higher tariffs for consumers.

All telcos will be allowed to keep 4.4 MHz of initial Spectrum and they won’t have to pay anything extra. The telcos that hold Spectrum in excess of 4.4 MHz, but up to 6.2 MHz, must pay prospectively while the telcos holding beyond 6.2 MHz will have to pay retrospectively from July 2008. The amount till December 2012 will be determined by indexing prices to current auction prices.

Officials said that as per the EGoM’s calculations, GSM telcos will have pay Rs 7,890 crore for Spectrum beyond 4.4 MHz but up to 6.2 MHz and Rs 13,036 crore for Spectrum beyond 6.2 MHz, a combined payout of Rs 20,926 crore.

The move is likely to bring in Rs 5,938 crore in the form of prospective charge from telcos holding CDMA Spectrum beyond 2.5 MHz. Another Rs 4,063 crore will come through indexing prices between July 2008 and December 2012 for Spectrum between 4.4 MHz and 6.2 MHz.