EGoM approved SUC of 5 percent of annual Gross Revenue on all new airwaves

The Empowered Group of Ministers (EGoM) on 27 January 2014 approved a Spectrum Usage Charge (SUC) of 5 percent of the annual gross revenue on all new airwaves acquired in auction. The telecom operators in existence till now have to pay the weighted average of their existing SUC and 5 percent if they acquire new spectrum. The decision of the EGoM would be sent to the cabinet for its final approval.

Kail Sibal, the Union Telecom Minister informed that 5 percent will be charged for all new spectrums that will be sold but it will be charged at weighted average. No protection of revenue will be charged.

The SUC for Broadband Wireless Access (BWA) spectrum would continue to remain at 1 percent because the existing contractual obligation has not been amended by the government. But the BWA will have to pay a SUC of 5 percent for the new airwaves that they will acquire. The companies will also have to separately report about the revenue earned from the BWA airwaves and new spectrums.

Background: The Government of India at present gets average SUC of 4.8 percent on the airwaves which have been allocated till date. The same has been fixed at 5 percent. The EGoM that is headed by Union Finance Minister, P Chidambram has been recommended with three options and they include
• A levy of 3 percent with weighted average
• 5 percent with weighted average
• Continuation of the existing regime

The charge is annually levied by the government as a percentage of revenue earned from telecom services.

This decision of EGoM came following a application written to the Department of Telecom to take a call on SUC before auction starts on 3 February 2014.