Govt Targets 64,580 Crore Revenue in FY17 From Spectrum Sale

NEW DELHI: Government targets a revenue of Rs 64,580.92 crore in the current financial year from spectrum auction proceeds, a Parliamentary panel has said. 

"For the year 2016-17, the Ministry of Finance have set the target of Rs 98,994.93 crore, which is inclusive of 64,580.92 crore as spectrum auction revenue," a report by the Standing Committee on Information Technology said today. 

The inter-ministerial panel Telecom Commission on Saturday agreed to base prices of various frequency bands recommended by the regulator Trai for the auction to be held in July this year. 

At the Trai-suggested base prices, auction of all spectrum would fetch Rs 5.36 lakh crore to the exchequer. 

The frequencies put on the block include spectrum in premium 700 Mhz band (4G and advance), 800 Mhz (2G,4G), 900 Mhz (3G, 4G), 1800 Mhz (2G,4G), 2100 Mhz (3G), 2300 Mhz (4G) and 2500 Mhz (4G). 

As per payment rule suggested by the panel, The panel has favoured that companies winning spectrum in higher frequency bands -- above 1Ghz like 1800 Mhz, 2100 Mhz, 2300 Mhz -- should make 50 per cent upfront payment and rest in 10 years after a 2-year moratorium. In earlier auctions, companies were given option to make 33 per cent upfront payment. 

For spectrum below 1Ghz band such as 700 Mhz, 800 Mhz, 900 Mhz, companies will require to pay 25 per cent upfront and rest in 10 years after a 2-year moratorium. It is in line with practice of earlier auctions but differs from Trai suggestion. 

Telecom Ministry will seek approval of cabinet on base price and auction terms. 

As per the rule approved by the inter-ministerial panel chaired by telecom secretary J S Deepak, a company interested in buying spectrum in 700 Mhz band will need to shell out a minimum of Rs 57,425 crore for a block of 5Mhz on pan-India basis. This band alone has the potential to fetch bids of over Rs 4 lakh crore. 

If all spectrum in 700 Mhz band gets sold at even Trai recommended base price, then successful bidder will need to pay over Rs 25,000 crore after auction. 

Leading operators have requested to defer sale of 700 MHz spectrum, saying that ecosystem for providing services in this band was not developed and sale would lead to underutilisation of the spectrum for several years and block industry's fund. 

The total potential revenue of Rs 5.36 lakh crore from the spectrum sale is more than double of telecom services industry gross revenue of Rs 2.54 lakh crore reported in 2014-15 financial year.
As per the report, the government earned Rs 54,072.48 

crore in 2015-16 from telecom services sector. 

The committee noted that licence fee and spectrum charges collected by the Department from telecom service providers are a major source of non-tax revenue to the government. 

"Under these items, the Department (of Telecom) earned an amount of Rs 30,693.58 crore in 2014-15 which increased to Rs 54072.48 crore, provision up to March 2015, in 2015-16," the report said.

The other source of revenue for government from the sector are dividends from public sector units, guarantee fees and pension contribution. 

"Under these items, the Department has earned Rs 940.7 crore during 2012-13, Rs 907.03 crore during 2013-14 and Rs 961.26 crore during 2014-15," the report said. 

Further, the committee has sought report from the DoT on loss of Rs 12,489 crore to the exchequer due to the reported understatement of revenues by six telecom operators including- Airtel, Idea and Vodafone. 

The DoT has informed the committee that a special audit has been ordered for the six major telecom operators for the financial year 20008-09 to 2010-11.

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