DoT to keep govt’s revenues in mind while setting SUC rate

NEW DELHI: The finance ministry has written to the telecom department suggesting that spectrum usage charge (SUC) should be fixed at a rate which ensures that the government’s revenue receipts aren’t affected. The letter to the telecom department, the contents of which were reviewed by ET, show that the finance ministry has categorically stated that the only explanation for a charge which lowers the nontax revenue receipts to the exchequer could be an “enhanced user base”.

“The auction of the spectrum may be made to achieve the targeted revenue realization,” the infrastructure division of the department of economic affairs under the ministry of finance has said. “Changes in the pricing may also be made to maximize the revenue realization in order to create more fiscal space for achieving the various targets of the government”.

The communication comes ahead of the crucial meeting of the telecom commission – the highest decision making body in the telecom department -scheduled for January 25 in which the inter-ministerial panel will take a call on what the annual charge should be.

In the meanwhile, the telecom department has sought an approval from the law ministry of fixing a flat SUC at 3% for voice spectrum and a weighted average for the broadband wireless spectrum users. The finance ministry’s missive could well be argued by the GSM industry players’ association to concur with their demand of a flat SUC.

The GSM industry players have maintained that for the government to maximise auction proceeds, it must levy a fixed SUC on the telecom operators which was suggested by the Telecom Regulatory Authority of India (Trai).

“Operators count in the rate of SUC they will have to pay (while bidding during auctions),” Vodafone had said in a recent communication to the telecom secretary while seeking clarity over the rate by January 27. The operators argue that if the government lowers the rate, then the bidding will be more aggressive as they will then have to pay out a lower annual charge and vice-versa.

The telecom department hopes to clock-in nearly Rs 41,000 crore from bandwidth, including proceeds from the upcoming sale and one-time spectrum levy. The government needs the funds to rein in its wide fiscal deficit which in turn will give it space to spend on the social sector in an election year.