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Corporate Jan 30, 2014

If 4G spectrum can be charged at 1%, why not 3G, asks Vodafone

By Sindhu Bhattacharya

New Delhi: If 4G BWA spectrum can attract the lowest 1% spectrum usage charge (SUC), why not 3G spectrum? Vodafone India today wrote to the Department of Telecom asking it to consider extending the lowest 1% slab rate for spectrum charge for 3G spectrum holders too. In 2010, when 2100 mhz 3G airwaves were sold by the Government, telcos indulged in irrational bidding which lead to huge cost escalation for them and forced them to increase debt on their balance sheets. This debt is the bane of most telcos till today. If the Government can allow 4G spectrum holders to get away with paying just 1% SUC, it seems fair for 3G spectrum holders to also seek a reprieve.

Vodafone India today wrote to the Department of Telecom asking it to consider extending the lowest 1% slab rate for spectrum charge for 3G spectrum holders too

Vodafone India today wrote to the Department of Telecom asking it to consider extending the lowest 1% slab rate for spectrum charge for 3G spectrum holders too

In its letter, Vodafone India today pointed that TRAI had also recommended SUC at 1% of adjusted gross revenue of telcos for bpth 3G as well as BWA airwaves.

"Since there is virtually no distinction between the services being offered on 2.1GHz/3G and BWA – as both are classified as mobile broadband - the Government...... should adopt the same SUC approach for both....for both the spectrums, the SUC be applied at 1% AGR with a weighted average for existing spectrum allocations in 900/1800MHz."

Vodafone said it would also be in public interest as it will enable faster rollout of 3G services. SUC is an annual levy which telcos have to pay based on a percentage of their AGR. An Empowered Group of Minister recently agreed to lower the highest slab at which SUC will be calculated for spectrum acquired in February auctions from 8% to 5%. It also said SUC will now be charged as weighted average of spectrum held. This has already eased the annual levy burden on telcos.

by Sindhu Bhattacharya

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