Airtel asks govt to decide on SUC before auction

Jan 23, 2014, 09.33 AM IST

Tags Bharti Airtel, Department of Telecom, spectrum usage charges, auction, MF Farooqui, Mukesh Ambani, Reliance Jio Infocomm, Telecom Regulatory Authority of India, Tata Teleservices (Maharashtra), Idea Cellular, Reliance Communications

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Airtel asks govt to decide on SUC before auction

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Telecom major Bharti Airtel has asked the Department of Telecom to decide on spectrum usage charges before auction starts on February 3. "We once again request the government to decide this critical issue of SUC well before the start of auctions to enable operators to taken an informed decision," Airtel said in a letter to Telecom Secretary MF Farooqui on January 21.

Also Read: Bharti Airtel to split Africa tower biz sale: Sources

The company said interested operators have already submitted applications on January 15 and spectrum usage charge (SUC) is an important component of the overall valuation of spectrum.

The spectrum usage charge (SUC), a bone of contention between leading GSM players and Mukesh Ambani-led Reliance Jio Infocomm, is levied annually as a percentage of revenue earned by telecom companies. It varies from 3-8 percent. The Telecom Regulatory Authority of India's (Trai) has suggested a uniform fee 3-to 5 percent from April 1 across telecom services for the success of the next round of spectrum auction.

GSM industry body Cellular Operators Association of India is demanding that the government implement Trai suggestion. On the other hand, Reliance Jio and Videocon Telecom are opposing any change in existing SUC regime, specially airwaves that have been already allocated. If Trai's recommendations are accepted, then it will burden firms holding broadband wireless access spectrum, including Reliance Jio that at present pays 1 percent spectrum usage charge.

The applicants include Reliance Jio Infocomm, Vodafone, Airtel, Aircel, Tata Teleservices , Idea Cellular , Telewings (Uninor) and Reliance Communications . The Finance Ministry has suggested that mobile operators winning in the auction should be charged only 3 percent of their revenue as annual fee for radiowaves they hold.

For BWA players, the Department of Economic Affairs (DEA) suggested continuation of 1 percent, but charge them weighted average of 3 percent and 1 percent if they buy spectrum in upcoming auction.

The DEA has suggested some other options as well which include charge of 3 percent on spectrum won in auction. For BWA players, DEA has suggested continuation of 1 percent, but charge them weighted average of 3 percent and 1 percent if they buy spectrum in upcoming auction.

For those who don't buy any spectrum in the due auction, DEA has suggested charging them as per existing rate slab. The option suggested by DEA will be discussed at the Telecom Commission meeting scheduled for January 25.

Bharti Airtel stock price

On January 23, 2014, at 11:14 hrs Bharti Airtel was quoting at Rs 313.90, up Rs 4.15, or 1.34 percent. The 52-week high of the share was Rs 373.50 and the 52-week low was Rs 266.95.

The company's trailing 12-month (TTM) EPS was at Rs 11.45 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 27.41. The latest book value of the company is Rs 135.70 per share. At current value, the price-to-book value of the company is 2.31.

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