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DoT scraps 3% floor rate on 5G spectrum usage charge
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IANS | 22 Jun, 2022
In
a big relief for telecom companies, the Department of
Telecommunications (DoT) has scrapped the 3 per cent floor rate on
spectrum usage charge (SUC).
As the government prepares
for 5G spectrum allotment next month, the telcos had been demanding to
scrap the SUC floor rate, equivalent to 3 per cent of adjusted gross
revenue (AGR), to cut their 5G spectrum payouts.
The DoT, in its
latest SUC computation order that came out late on Tuesday, did not
mention the 3 per cent floor rate, which means it has been scrapped,
industry watchers said.
The Cellular Operators Association of
India (COAI) welcomed the much-awaited DoT order regarding the levy of
SUC charges for spectrum in 600, 700, 800, 900, 1800, 2100, 2300, 2500,
3300 MHz and 26GHz bands.
"The order will provide clarity to telecom service providers for the upcoming auctions," said Lt Gen Dr SP Kochhar, DG, COAI.
The government is set to launch 5G spectrum bids at the end of next month.
The
Union Cabinet has approved the telecom department's proposal to conduct
an auction through which spectrum will be assigned to the successful
bidders for providing 5G services to public and enterprises.
Payments
for spectrum can be made in 20 equal annual installments in advance at
the beginning of each year. It is expected to significantly ease cash
flow requirements and lower the cost of doing business in the telecom
sector.
Spectrum auction will begin on July 26. The Department of
Telecom has released a notice inviting applications (NIA) for the
auction of spectrum in 600, 700, 800, 900, 1800, 2100, 2300, 2500, 3300
MHz and 26GHz bands.
The last date for submission of application
is July 8 and it will give an indication of potential participants for
the auction and earnest money deposit on July 20 which will indicate
maximum spectrum payout for each telco.
Further, spectrum purchased in the upcoming auction will have two payment options.
First one is full or part upfront payment of total bid amount within 10 days of auction completion.
Part payment should be made at least for two years' instalment or multiple complete years.
Thereafter,
the buyer will have the option to avail moratorium for the
corresponding number of years of payment. Second is payment in 20 yearly
equal instalments with first instalment due in 10 days of completion of
auction.
The rate of interest of calculating installment is
fixed at 7.2 per cent. Pre-payment of spectrum dues is allowed without
any penalty.
The telcos are allowed to surrender spectrum that
will be auctioned after a minimum period of 10 years from the date of
acquisition.
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