Government demands Rs. 23k crore from telcos for excess spectrum

The government has issued demand notices totalling over Rs. 23,000 crore to telecom companies including Bharti Airtel, Vodafone and BSNL, for the excess spectrum they hold beyond the prescribed limit.
"The notices have been issued to the operators Wednesday," an official source said.
The government is likely to get Rs. 4,251.83 crore from retrospective charges, and Rs. 18,925.82 from prospective charges for excess radiowaves held by mobile operators.
In all, around Rs. 23,177 crore is expected from levy of one-time spectrum fee, sources added.
State-owned BSNL will have to pay around Rs. 6,912 crore, followed by Bharti Airtel - Rs. 5,201 crore, Vodafone - Rs. 3,599 crore, MTNL - Rs. 3,205 crore, Idea Cellular - Rs. 2,113 crore (includes Rs. 231.5 crore of Spice), Aircel - Rs. 1,365 crore (includes Rs. 14 crore of Dishnet), Loop Mobile - Rs. 606 crore and Reliance Communications - Rs. 173 crore.
Initially, telecom firms were given 4.4 MHz spectrum along with licence for Rs. 1,658 crore for pan-India operations and later they were entitled to get another 1.8 MHz on fulfilment of certain subscriber-base criteria.
In November, the government decided that the operators should pay for holding spectrum above 6.2 MHz retrospectively, from July 2008 to January 1, 2013.
After that, for spectrum above 4.4 MHz, they would have to pay for the remaining period of their licences based on auction held last November.
Sources said the Department of Telecom (DoT) has tentatively fixed provisional rate for spectrum in 1800 Mhz band for Delhi, Mumbai, Rajasthan and Karnataka circles where it did not receive any bids, as also for the more efficient 900 MHz band.

BSNL, MTNL hit by competition, rising costs: Government

Government on Wednesday said state-run BSNL and MTNL suffered losses to the tune of Rs. 12,960 crore in 2011-12 as a result of stiff competition in mobile sector, high staff cost and payment of spectrum charges.
"The loss of BSNL during 2011-12 stood at Rs. 8,851 crore and MTNL at Rs. 4,109 crore," Minister of State for Communications and Information Technology Milind Deora said in a written reply to Lok Sabha.

BSNL suffered a loss of Rs. 1,823 crore in 2009-10 and Rs. 6,384 crore in 2010-11 while MTNL's loss stood at Rs. 2,611 crore in 2009-10 and Rs. 2,802 crore in 2010-11, Deora added.

Citing reasons for losses of the two state-run telecom companies, Deora said the revenue has decreased because of fixed to mobile substitution and stiff competition in mobile sector.

"Staff cost is very high as compared to the other private operators. In case of BSNL, it is around 50 percent and in case of MTNL, it is more than 70 percent of the revenue," Deora said.

He added both BSNL and MTNL have paid Rs. 18,500 crore and Rs. 11,098 crore respectively as upfront spectrum charges for 3G (third generation) and broadband wireless access (BWA).

The market share of two telcos has also declined in the last two years.

"Market share of BSNL stood at 17.34 percent as on March 31, 2010 which has declined to 14.14 percent as on September 30, 2012 while that of MTNL has declined to 10.67 percent from 14.21 percent in the same period," Deora said.

On a query if both PSUs have taken loan and sold their properties to meet administrative expenses, Deora said BSNL and MTNL have not sold land assests but have taken loans.

"During the last three years, BSNL has taken a loan of Rs. 1,320 crore for capex and has paid Rs. 99 crore as interest on loan whereas MTNL has taken a loan of Rs. 11,264 crore and has paid Rs. 2,064 crore as interest on loan till October 2012," Deora said.

He added both the PSUs have taken a number of steps to improve their financial position.

In order to strengthen its sales and distribution channel of mobile, BSNL has started Project Vijay and also plans to augment capacity by 15 million in phase VII.

The telecom PSU holds weekly meetings with retailers and sales team at district level and also fixes targets to sales team.

In the same way, MTNL is reviewing its tariff for various products and services so as to make them customer friendly and has launched loyalty scheme and special care services of corporate customers.