Slab-based SUC may result in 'stifle participation': Vodafone

Company says EGoM should accept Trai proposal on uniform SUC of 3% for forthcoming auctions

Vodafone India, the country’s second largest telecom operator by subscriber base, has said that the slab-based spectrum usage charges (SUC) may result in “stifle participation” in the upcoming auction.

In a letter to Finance Minister P Chidambaram, who also heads the Empowered Group of Ministers (EGoM) on telecom, Vodafone has said that the EGoM should accept the recommendation of the Telecom Regulatory Authority of India (Trai) on uniform SUC of 3% for the forthcoming auctions.

“Correcting the existing SUC regime is imperative for any effective spectrum reforms to be implemented. Failing this, all spectrum policy reforms being considered by the Government – such as merger and acquisition (M&A) norms, spectrum sharing, trading, etc. – will simply not succeed,” Vodafone said in a statement.

If SUC were maintained at the existing differential and discriminatory levels instead of a uniform SUC as recommended by Trai, it would once again stifle participation in auctions, it said, adding that the regulator has also rightly highlighted that the existing SUC regime has spawned several anomalies and contains numerous inherent deficiencies. Operators currently pay between one and 8% of their revenue as SUC depending on the quantum of spectrum they hold.

However, companies like Reliance Jio that holds broadband wireless access (BWA) spectrum has repeatedly deliberated against the uniform SUC at 3% as it would increase SUC for BWA spectrum holders who now pay just one% of revenue.

Vodafone said that it has written to Chidambaram requesting the EGoM to take a decision that would revive the fortunes of the telecom industry and benefits consumers as well as the nation.

Supporting the Government’s decision to allow trading of spectrum, Vodafone noted that the Government should announce this before the next auction so that it comes as part of the notice inviting applications (NIA).

It has also stated that the existing 900MHz spectrum, which is being used by operators at present, should not be auctioned. Instead, a reasonable price for its extension should be set after mutual discussions, and it would also benefit the consumers.

The company claimed that it has made an offer of Rs 4,000 crore to the Department of Telecommunications (DoT) at 3% SUC for extension of its existing licences (900MHz spectrum) for Delhi, Mumbai and Kolkata service areas for 20 years. The licences are due for renewal in November 2014.