Telecom licence renewal may cost more

Companies providing cellular services may have to shell out sizeable sums to renew their licences’ to continue operating which may be due to expire in the coming years, if a government panel has its way. The panel, which was set up to resolve all spectrum-related issues, has recommended that telecom companies should pay a fee equivalent to the market value of the spectrum they hold at the time of renewal. Most telecom operators had got their licences in the early 1990s for a 20-year period which is set to expire over the next couple of years. Currently, these companies can get a pan-India licence for Rs 1,651 crore, a rate determined in 2001. India is divided into 22 circles and each of them has a different entry fee, and the total adds up to this amount. The panel has proposed three possible methods to determine the fee which operators will have to pay to renew their licences. It has also added that if the company refuses to pay the renewal fee, the airwaves it holds will be auctioned by the government. While all major operators refused to comment, since the panel’s report is yet to be made official, some of them said they would oppose any proposal that would result in high renewal fee. Two operators also pointed out that in most countries, licence extension was automatic. The panel’s recommendations form a sharp departure from the views expressed by both the communications ministry and the telecom regulator Trai. Last year, DoT had proposed that telcos pay about Rs 825.5 crore for extending their licence tenure by 10 years. But, this was rejected by Trai who wanted to make the renewal automatic. DoT had arrived at this figure as follows: The entry fee of Rs 1,651 crore multiplied by 10 (the number of years for which the licence needs to be extended), and the total is divided by 20 (the number of years for which the telco can use its spectrum). DoT was of the view that the government can garner an additional Rs 3,000 crore by extending the licences of existing players.