Bharti Airtel, Reliance Jio and Vodafone Idea (Vi) will be very happy with the Department of Telecommunications (DoT) after the SUC (Spectrum Usage Charges) order. The telecom department has removed the 3% floor rate on SUC and this would help the telcos in saving a lot of future outflows towards these statutory fees. The telecom operators had recently told DoT that while removing SUC from future spectrum acquired through auctions is a good move, it wouldn’t mean anything if the SUC floor rate of 3% of AGR (adjusted gross revenue) is not removed. The Indian government had implanted the rule of 3% SUC in 2016 to ensure that the revenues for the centre are protected. In the same year, the SUC for the telcos had been lowered. On June 21 order, DoT said that “The weighted average is to be derived by the sum of the product of spectrum holdings and applicable SUC rate, divided by (a telco’s) total spectrum holding.”
Liquidity Concerns Being Addressed by the Government
The Indian government is addressing the liquidity concerns of the telcos. Airtel, Jio, and Vi (Vodafone Idea) will all benefit from this move. Without the floor of 3%, the SUC equivalent to 3% of the AGR for the telcos would drop well below 3%. This means that the telcos will be able to save a lot of money that otherwise would have gone out as statutory dues. Through all the relief measures announced till now, the government has been focusing on reducing liquidity stress from the telcos. The telecom operators got a four-moratorium for payment of AGR and SUC dues and Vi has also agreed to give the government stake in the company against the reduction of interest dues. This is going to benefit the telecom sector in the long run and boost India’s journey into turning a digital nation. Lt. Gen. Dr. S P Kochhar, DG, COAI, said “We welcome and thank the Government & Minister of Communications for the much-awaited DoT order regarding the levy of SUC charges for spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz 2500 MHz, 3300 MHz and 26 GHz bands. The order will provide clarity to telecom service providers for the upcoming auctions.”
