Empowered Group of Ministers (EGoM) on telecom, headed by finance minister P Chidambaram, will seek fresh legal opinion from the Attorney general of India (AG) on the decision that it has taken to impose one-time fee on incumbent telecom operators prospectively from 4.4 Mhz.
The move was in variance with the opinion of the attorney general of India who had opined that the one time charge should be levied on spectrum beyond 6.2 MHz with retrospective effect from July 2008.
According to a senior DoT official, the EGoM will approach the AG again for an opinion on the one-time fees explaining the reasons why the panel differed from AG’s opinion and opted to levy one-time fee on spectrum beyond 4.4 Mhz with prospective effect and not retrospective effect as suggested by the AG.
The fresh opinion from AG will then be placed before the Cabinet, which is scheduled to meet on October 16 to decide on the EGoM’s recommendations. The Cabinet will have the final say in the matter. The one-time fee will be applicable from the date of the Cabinet’s decision.
Explaining EGoM’s stand, the official said the EGoM had raised questions on charging one-time fee only beyond 6.2 Mhz because, this would mean that implicitly the Government has accepted an obligation under the licence to give up to 6.2 Mhz of spectrum.
Among GSM operators, there are 90 licencees that have spectrum of 6.2MHz or above, while there are 64 companies have between 4.4MHz and 6.2MHz. In case of CDMA, 33 licencees hold 2.5MHz of spectrum, while 35 licencees hold either 3.75 MHZ or 5 MHz.
If the EGoM’s recommendations be implemented, they are likely to fetch the exchequer Rs 27,000 crore. According to the DoT’s assessment, the government will get Rs 7,900 crore from the one-time fees paid by the GSM operators for spectrum in the 4.4 MHz to 6.2 MHz range, and Rs 13,200 crore on spectrum beyond 6.2 MHz. In the case of CDMA, spectrum beyond the 2.5MHz threshold would earn the government Rs 6,200 crore.
The calculations of DoT is based on the base price of Rs 14,000 crore for the GSM players and Rs 18,200 crore for the CDMA players.
Of the total amount, the outgo of the two telecom PSU-BSNL and MTNL would be around Rs 10,000 crore, the rest would be from private operators such as Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications and others.
The official added, that considering the financial health of the two state-run telecom firms the government may look at extending financial assistance to the companies to pay the one-time fees.
On the crucial issue of refarming of spectrum, the official said that the EGoM is likely to take a decision before the actual auction starts in November, 2012.
Telecom stocks today fell at the Bombay Stock Exchange. Idea Cellular plunged 3.24% to Rs 82.05, while Bharti Airtel closed at Rs 265.20, down 1.83%, Reliance Communications lost 2.38% and closed at Rs 61.60.
