Vodafone India in a letter to the Finance Minister and Empowered Group of Ministers (EGoM) on telecom, made an offer towards extension of its expiring licenses.
In its letter, the company offered to pay Rs 4,000 crore and a spectrum usage charge (SUC) of 3 per cent towards extending its license of Delhi, Mumbai and Kolkata circles. Interestingly, at Rs 4,000 crore, telecom operator has offered about one fourth of suggested spectrum price by Telecom Regulatory Authority of India (TRAI).
Vodafone India’s three licenses are about to expire in the last quarter of 2014 and as per a decision taken by the Government earlier, the company will have to buy spectrum again through auction. Through the letter, company has urged P Chidambaram, who also heads the EGoM on Telecom, to accept telecom regulator’s recommendation of levying annual spectrum fee of 3 per cent on all operators.
“The Company has also submitted that the existing 900 MHz being used by operators should not be auctioned. Instead, a reasonable price for its extension should be set after mutual discussions. Towards this end, Vodafone had made an offer of Rs 4,000 crores to DoT at 3 per cent SUC for extension of its existing licences for Delhi, Mumbai and Kolkata service areas for 20 years,” Vodafone said in its letter to the Minister.
TRAI in September recommended about 62 per cent reduction in the price of premium 900 Mhz spectrum band held by Vodafone and others. As per the telecom regulator’s suggestions, spectrum should be sold at a base price of Rs 650 crore per megahertz.
Vodafone currently holds 23.8 Mhz spectrum in Delhi, Mumbai and Kolkata service areas and as per the reserve price suggested by TRAI, company would have to pay Rs 15,470 crore to continue its operations in the three metros. The company has also conveyed its intentions to Telecom Minister Kapil Sibal requesting him to consider the company’s proposal in the EGoM meeting scheduled for November 22.
“Vodafone India has urged EGoM to accept the TRAI recommendation for a uniform SUC regime and for setting the SUC at 3 per cent adjusted gross revenue (AGR) for the forthcoming auctions.”
At present, mobile service provider are charged between 3 to 8 per cent of their AGR annually, depending on the quantum of spectrum they hold. Company also opposed increase of up to 25 per cent in spectrum price as suggested by the Telecom Commission (TC) over TRAI recommended price.
“The reserve price of 1800 MHz spectrum, to be auctioned as per the Supreme Court order, as recommended by TRAI was still on the higher side. Further increase in the reserve price of spectrum by the Telecom Commission will adversely affect participation in forthcoming auctions,” Vodafone said.