"TC is of the view that all available spectrum should be put for auction at Trai-recommended price in the upcoming auction. It will be send to the Cabinet for final approval," a source said.
The auction is to be held in July and would include sale of most premium 700 Mhz band at a price of Rs 11,485 crore per Mhz. The cost of delivering mobile services in this band is estimated to be around 70 per cent lower than 2100 Mhz band, used for providing 3G services.
The total potential revenue of Rs 5.36 lakh crore from the spectrum sale is more than double of telecom services industry gross revenue of Rs 2.54 lakh crore reported in 2014-15 financial year.
Leading operators have requested to defer sale of 700 MHz spectrum, saying that ecosystem for providing services in this band was not developed and sale would lead to underutilisation of the spectrum for several years and block industry's fund.
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The government expects a revenue of Rs 98,995 crore from the sector in 2016-17, which includes proceeds from spectrum auction and other fees levied by the DoT.
The panel has also suggested stringent payment conditions compared to liberal method suggested by Telecom Regulatory Authority of India.
The panel has favoured that companies winning spectrum in higher frequency bands -- above 1Ghz like 1800 Mhz, 2100 Mhz, 2300 Mhz -- should make 50 per cent upfront payment and rest in 10 years after a 2-year moratorium. In earlier auctions, companies were given option to make 33 per cent upfront payment.
Trai had recommended that the government should charge only 10 per cent of bids received for spectrum, and the balance payment should be made over a period of 18 years in equal instalments with interest.
The panel however deferred decision on contentious issue of spectrum usage charge (SUC) from telecom operators annually. Reliance Jio Infocomm and some leading operators have locked horns on this issue.
According to a source, technical committee at Department of Telecom has suggested to levy 4.5 per cent SUC uniformly on all operators as it is not possible to ensure their earning from any particular spectrum band.
SUC was earlier linked to quantum of spectrum holding of an operator in the range of 3-8 per cent of their adjusted gross revenue.
After evaluating the impact on the exchequer, government in January 2014 decided to cap SUC at 5 per cent on spectrum that were to be procured in future auction. The SUC collection was at 4.8 per cent level that time.
Telecom operators at that time were asked to pay the weighted average of their existing SUC (on old rate of 3-8 per cent), and 5 per cent if they acquire new spectrum.
Reliance Jio has contested this view as it pays only 1 per cent SUC on its spectrum in 2300 Mhz band and proposal to levy 3 per cent would put extra burden on the company.
The DoT is also in discussion with Defence Ministry to get 15 Mhz of 3G spectrum freed for the upcoming auction. Trai has recommended pan-India base price of Rs 3,746 crore per Mhz for this band.
The TC is learnt to have approved Rs 2,873 crore per Mhz for pan-India 1800 Mhz band, Rs 817 crore per Mhz for 2500 Mhz and 2300 Mhz and Rs 5,829 crore for 800 Mhz. Trai has recommended base price for 900 Mhz spectrum in six circles which the panel has approved.
(voluntary retirement scheme) for MTNL employees above 50 years of age with government support of up to Rs 2,000 crore.
Expenses on over 40,000 MTNL employees are 78 per cent of its total revenue against industry average of 3 per cent.
Around 26,500 MTNL employees are estimated to retire in the next 10 years and under the proposed scheme about 5,300 will be eligible for VRS, which will be open for about three months period from the date of Cabinet approval.
The panel believes that MTNL could save about Rs 500 crore from VRS offering which it can use for improving the quality of service. The TC also approved asset monetisation plan of MTNL like infrastructure-sharing and building rental.
To improve connectivity in A&N islands, the panel has given nod to laying of submarine cable which will cost around Rs 1,000 crore to the government. At present, telecom services in the islands are provided through satellites.
The panel has also approved increasing satellite bandwidth three times for Lakshadweep islands from 100 mbps to 300 mbps.
For Bharat Net project, the panel has approved a plan to connect 1 lakh village panchayats with high speed broadband by March 2017 with the help of optical fibre and expeditious purchase of equipment.
In the third phase, the commission has approved building of future proof network for rural broadband which would include strengthening of network by expanding optical fibre and use of satellites.
Meanwhile, Deloitte Haskins & Sells LLP, Partner, Hemant Joshi said the TC-approved base price in all bands is high and demand for the spectrum is likely to be low as the operators have still not used the spectrum from the last auction.
"With the debt of Rs 3.5 lakh crore (USD 53 billion), the telecom industry is highly indebted and operators might not bid aggressively and may bid only for circles where they are in need of spectrum given the high price and high debt scenario," Joshi said.