Vodafone offers to pay Rs 4,000 cr for extension of licences

Nation's second-largest telecom firm Vodafone India has offered to pay Rs 4,000 crore and a spectrum usage charge of 3 per cent for extension of permits for Delhi, Mumbai and Kolkata service areas for 20 years.

At Rs 4,000 crore, Vodafone is offering about one fourth of TRAI's suggested price for the premium mobile airwaves.

Vodafone's three permits held for Delhi, Kolkata and Mumbai are due to expire in the last quarter of 2014.

As per a decision taken by the government earlier, the company will have to buy spectrum afresh which it holds through these permits to continue operations.

The company has written a letter to Finance Minister P Chidambaram, who also heads the Empowered Group of Ministers on Telecom, to accept telecom regulator TRAI's recommendation of levying annual spectrum fee of 3 per cent on all operators.

"Vodafone had made an offer of Rs 4,000 crores to DoT at 3 per cent SUC (spectrum usage charges) for extension of its existing licences for Delhi, Mumbai and Kolkata service areas for 20 years," Vodafone said in its letter to the Minister.

The Telecom Regulatory Authority of India (Trai) in September recommended about 62 per cent reduction in the price of premium 900 Mhz spectrum band held by Vodafone and others.

As per the telecom regulator's suggestions, spectrum should be sold at a base price of Rs 650 crore per megahertz.

Vodafone, which holds 23.8 Mhz spectrum in Delhi, Mumbai and Kolkata service areas, has to pay Rs 15,470 crore at TRAI's suggested base price to continue operations in the three metros.

The company has also conveyed its intentions to Telecom Minister Kapil Sibal requesting him to consider the company's proposal in the EGoM meeting scheduled for November 22.

Vodafone India has urged "EGoM to accept the TRAI recommendation for a uniform SUC regime and for setting the SUC at 3 per cent AGR (adjusted gross revenue- earned from telecom services only) for the forthcoming auctions."

At present, mobile service provider are charged between 3 to 8 per cent of their AGR annually ,depending on the quantum of spectrum they hold.

Mukesh Ambani-led RIL's telecom arm Reliance Jio Infocomm Ltd (RJIL), which holds wireless broadband spectrum, is required to pay 1 per cent SUC as per terms and condition on which it purchased spectrum in 2010. The company has said TRAI's recommendation of higher SUC can raise legal issues.

Vodafone has also opposed increase of up to 25 per cent increase in spectrum price suggested by inter-ministerial panel Telecom Commission over TRAI recommended price.

"The reserve price of 1800 MHz spectrum ,to be auctioned as per the Supreme Court order, as recommended by TRAI was still on the higher side. Further increase in the reserve price of spectrum...by the Telecom Commission will adversely affect participation in forthcoming auctions," Vodafone said.

Vodafone has recently approached the government to invest over Rs 10,000 crore in its India unit and said that it expects to maintain average investment of Rs 4,000 to 6,000 crore every year in the country.

Arvind Kumar Pathak

PGDM3rd sem