India’s regulators agreed to reduce the spectrum usage charge from 5 per cent to 3 per cent of gross revenues on spectrum acquired in the next around of auctions, which are scheduled for July.
The tax reduction, approved by the telecoms ministry but needs final approval by the Cabinet, could free up as much as INR32 billion ($480 million), which would help mobile operators reduce their high debt burdens and lower data and voice prices for consumers, the Economic Times reported.
The government is expected to auction off more than 2,000MHz of spectrum across seven frequencies.
The Telecom Regulatory Authority of India (TRAI) had recommended a uniform 3 per cent rate for all types of services, but Reliance Jio, which pays a 1 per cent usage fee on its pan-India broadband wireless access (BWA) spectrum, opposed the move.
The government then agreed that BWA holders could continue paying 1 per cent on BWA spectrum but asked operators to pay 3 per cent of gross revenue on all spectrum purchased in the future.
Mobile operators have long pushed the government to lower the usage fee, which ranged for 3 to 8 per cent before it was capped at 5 per cent two years ago.
The 5 per cent rate applies to spectrum acquired through auctions, while there is a weighted average method to calculate the charge where operators hold spectrum under the previous administered rate regime, ET said.