NEW DELHI: A cash-strapped government is once again looking to tap the telecom sector to raise over Rs 58,000 crore through auction of spectrum, including those vacated by 122 telecom licence holders who were ordered to surrender permits and airwaves by the Supreme Court.
The realization from the 122 licences alone is budgeted at around Rs 40,000 crore, finance secretary R S Gujral said. Last year, government raised over Rs 1 lakh crore by auctioning spectrum for 3G and broadband wireless services, and managed to show healthy finances. Finance minister Pranab Mukherjee had hoped for a repeat act in 2011-12 but had to contend with zero realization from spectrum this year. He is now hoping ‘Goddess Luck’ will smile on him during the next fiscal.
The decision to auction comes despite government filing a review petition contesting Supreme Court’s jurisdiction in delivering the 2G verdict. In addition, a presidential reference is proposed to be made to check the validity of licences issued before the A Raja era where the first-come first-served policy was used.
The higher burden of companies such as Telenor and Sistema which are planning to rebid will come with heftier bills for cellphone users who should brace to pay more on account of a 2% increase in service tax. According to Deloitte, the tax hike will result in an additional cost of Rs 2,500 crore to telecom consumers.
“This will have an impact on consumers and industry at large… If operators don’t pass through the entire tax hike, we will have to tinker with our tariff structure,” said Idea Cellular MD Himanshu Kapania.
Levies seem to unite even a divided industry like telecom. “From a global perspective, the telecom industry in India continues to attract the highest tax rate of 23%. It would have been good, if this could have been rationalized ,” said Vsevolod Rozanov, president & CEO of MTS India.