NEW DELHI: Chief executives of India's top three mobile phone companies - Bharti Airtel, Vodafone andIdea CellularBSE 2.53 % - have sought Prime Minister Manmohan Singh's intervention to overturn a recent decision of the Union cabinet imposing a one-time spectrum charge, both prospectively and retrospectively, on incumbent GSM telcos.
Bharti AirtelBSE 1.62 % CEO Sanjay Kapoor, Idea Cellular MD Himanshu Kapania, and Vodafone India MD and CEO Marten Pieters asserted in a joint letter to the prime minister that the one-time charge violated terms of the licence, breached a settlement the government had reached with the industry in 2002, and also contradicted statements made by the ministry on the floor of Parliament.
Besides, according to the CEOs, the one-time charge contradicted the government's stance in affidavits it had filed with the telecom tribunal and was also against Trai's views and recommendations during the last 10 years.
Earlier this month, the cabinet endorsed a recent decision by an inter-ministerial panel to impose a one-time payment for airwaves held by GSM-based operators, a move that will force the industry to shell out 24,989 crore. Of this, the share of private operators is 13,171 crore.
The Centre will bear the cost of this one-time fee for state-owned companies BSNL and MTNLBSE 2.87 %. A decision on a similar fee for CDMA players was deferred as the government did not have any price to benchmark these airwaves following the failure of auctions in the 800 MHz band.
The one-time fee has two components. First, mobile phone companies have to pay for all their 2G spectrumholdings beyond 4.4 MHz prospectively for the remaining period of their licences, based on the prices discovered in the recently concluded auctions. Second, incumbent GSM operators such as Bharti, Vodafone, Idea and BSNL will be charged a one-time fee retrospectively for all 'excess' 2G airwaves they hold beyond the 6.2 MHz mark from July 2008 to December 2012. These charges will be calculated by indexing the 2001 spectrum auction prices to interest rates charged by the State Bank of IndiaBSE 0.06 %.
The CEOs pointed out that GSM operators had withdrawn all cases against the government in 2002 after India moved to a spectrum charge regime, where companies share a certain percentage of their annual revenues based on the quantum of airwaves they hold. The communication states that the existing regime has been a win-win for the government and the industry, with telcos shelling out an "additional Rs 8,000 crore since 2002 towards spectrum usage charges for additional airwaves".
The current structure is expected to bring in another Rs 10,000 crore as mobile phone companies will pay these fees till licence expiry, they added.
"Under these circumstances, we are at a loss to understand the basis and justification on which such a high one-time fee has been proposed without corresponding reduction in spectrum usage charge. The proposed one-time fee will only lead to unjust enrichment for the government by way of double charging of the same spectrum," the CEOs said while adding that the fee was being imposed only on GSM players.
