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3G spectrum auction as scheduled

CHENNAI: The auction of spectrum for providing third generation (3G) cellphone services will be held as scheduled, it was decided at a meeting Prime Minister Manmohan Singh held with Finance Minister P. Chidambaram and Communications and Information Technology Minister A. Raja in New Delhi on Tuesday.

The meeting decided that the auction should go ahead since it was already delayed for long.

The perceived loss over the auction should not result in the country losing out on time to adopt newer technologies. The gains for the country would be much more in the long term, it was reasoned.

The revenue from the AGR (Adjusted Gross Revenue) route would go up. The meeting decided to hike the AGR by one per cent for those operators who hold up to 8 MHz frequency. For those with more than 8 MHz, the AGR has been hiked by two per cent.

With effect from April 1, 2004, the licence fee, excluding spectrum charges for cellular mobile telephone services, is 10 per cent of the AGR for the Metro Service Areas and category ‘A’ circles, eight per cent of the AGR for category ‘B’ circles and six per cent for category ‘C’ circles.

The old cellular licensees (1st and 2nd CMTS licensees) in telecom circles have been given an additional concession for four years (from April 1, 2004) in the licence fee. The licence fee, excluding spectrum charges for old cellular licensees (1st and 2nd CMTS licensees) in telecom circles is eight per cent of the AGR for category ‘A’ circles, six per cent of the AGR for category ‘B’ Circles and five per cent of the AGR for category ‘C’ circles for four years.

In addition, the Prime Minister cleared Mr. Raja’s proposal for levying a one-time charge on spectrum usage. The Telecom Commission will draw up the modalities of this levy.

The issue of offloading of stocks by Swan and Unitech was discussed at length. The Finance Minister was of the opinion that the dilution of investment did not amount to a sale or trade of the licence. Besides, foreign direct investment was allowed up to 74 per cent in telecom. Hence, there was nothing wrong with the deals as long as they complied with the guidelines of the Foreign Investment Promotion Board. The deals were well within the ambit of corporate law, the meeting was told.

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