The Indian Cabinet Ministers [eGOM ] finalized a set of recommendations to impose a one-time fee on the incumbent operators on spectrum in excess of 4.4MHz in the GSM segment and 2.5 MHz in the CDMA segment. The cut-off is lower than the earlier-anticipated 6.2Mhz. While the charge is largely on expected lines, the proposal of prospective implementation will limit payouts. This takes us a step closer to clarifying most of the spectrum pricing-related issues and ensuring a level playing field between incumbents and new operators as far as spectrum is concerned.
Excess Spectrum fee at What Price ? Clarity on pricing is still awaited. My guesstimate will be that the prices will be linked to the forthcoming auction price in respective circles. But what about the pricing of 900MHz Spectrum ? Should that be treated at par with 800Mhz ?
Impact on Wireless Sector – Regulatory uncertainty continues to reduce and the peak of the competition looks to be behind us. This will lead to higher spectrum related payouts for the operators and note that the impact from the one-time fees is still likely to be much lower than the impact from license renewal related costs. Amidst a slowing growth environment, tariff discipline will return to market.
Assuming the excess spectrum fee to be linked to base price of the forthcoming auction, Bharti Airtel will have to shell out ~ Rs 38 bn and Idea Cellular Rs18bn. MTNL & BSNL together will take the biggest hit if the Government decides to collect the Spectrum fees without any waiver. Reliance Communications will also be hit in the CDMA 800MHz Segment as much Rs 30 Bn. Lets wait for the final decision from the DoT.