India to cap spectrum usage fees at 5%

India to cap spectrum usage fees at 5%

Indian ministers have agreed to cap the fees telecom companies pay to use mobile frequencies at 5% of annual gross revenue.

The new spectrum usage charge will apply only to the spectrum acquired at the auction next month.

"For all new spectrum which will be sold, it will be 5% but it will be charged at weighted average. There is no protection of revenue. In this process if government losses some revenue, it doesn't matter. Ultimately consumers have to be benefited," said Kapil Sibal, Telecom Minister.

The move results in lower payments for large carriers and scraps the 3-8% charge the country levies in order to encourage operators to take part in the planned auction. This will be India’s third attempt at auctioning two frequency bands.

Sibal confirmed companies including Reliance Industries, which bought 4G spectrum in 2010, will continue to pay 1% of revenue as an annual fee for the spectrum.

The proposals to cap the charge will go to the cabinet for final approval.

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