Airtel, Idea, RCom Surge on SUC Cut
New Delhi: Shares of Bharti Airtel, Idea Cellular and Reliance Communications (RCom) rose sharply on Monday on news the Telecom Commission (TC) has lowered spectrum usage charge (SUC) to 3% of annual revenue for airwaves bought in the upcoming auctions, from the 5% pegged in the previous two sales. At close on the BSE on Monday, Airtel was up 3.8% at .₹ 347.85, Idea had risen 6% to .₹ 113.30 and RCom had gained 1.9% at .₹ 51.25, outpacing a positive broader market.
On Monday, telecom secretary JS Deepak told ET that the TC — the highest decision-making body in the DoT — had approved an SUC of 3% for airwaves bought in the next sale, in a bid to attract aggressive bids in the auctions scheduled in July in which the regulator has recommended putting over 2100 MHz of airwaves on sale across 3G and 4G technologies, including in the cost-efficient but expensive 700-MHz band.
SUC is the annual fee that telcos pay the government for using the natural resource.
“As for the overall spectrum usage charge, that will remain a weighted average of the new charge and the previous levy,” Deepak said. The TC decision on SUC will now be sent for ratification by the Union Cabinet. Once cleared, overall, carriers will continue to pay a weighted average of the new SUC (3% for airwaves in upcoming auctions and 5% in the previous two auctions) and older fee (3-8% of annual revenue) for the overall airwaves they hold. The SUC on BWA spectrum in the 2300-MHz band continues to be a flat 1%.
But Rajan Mathews, director general of GSM lobby group COAI, said that while reducing the SUC for the next auctions was a step in the right direction, it was a half-baked measure. “The regulator has said that the government should charge SUV of 3% and we are hoping that the proposal will be entirely accepted,” Mathews said.
Trai had suggested a flat 3% SUC for all airwaves held by operators, but the government had in January 2014 decided to keep the fee for auctioned spectrum at a flat 5%.
SUC was lowered to 3% of annual revenue for airwaves bought in the upcoming auctions