Licence fee revision may positively impact telcos: Analysts
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Licence fee revision may positively impact telcos: Analysts

Last Updated: Thursday, February 23, 2012, 23:04
 
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Licence fee revision may positively impact telcos: Analysts
Mumbai: Revision of licence fees by the Department of Telecom (DoT) may impact private operators in a positive manner, according to analysts tracking the sector.

"The DoT has decided on a uniform licence fee of 8 per cent in two annual steps starting 2012-13.

"This is likely to have a positive impact on the cost structures of most telcos whose licence fee expense as a percentage of their AGR is in the range of 8.4 to 9.2 percent for the quarter ended September 2011," an ICRA report said.

Typically, the circles in which the licence fee as a percentage of AGR is 6 per cent are also the ones where teledensity is low.

Therefore, making licence fee uniform at 8 per cent in all circles may discourage service providers from expanding their presence in the low-teledensity circles, as expansion would mean paying a higher licence fee, argues the report.

It also says that while DoT has largely decided on several issues related to spectrum management and telecom licensing, there are quite a few issues outstanding.

The framework governing the implementation of the unified licence regime, including the migration path for all existing licences to a unified licence is not clear, according to the report.

The Telecom Regulatory Authority had earlier recommended that at the time of licence renewal, spectrum should be awarded only in the 1,800 MHz band after re-farming of spectrum.

"This could have a significant impact on the operations and finances of telecom service providers currently holding spectrum in the 900 MHz band, as this band provides greater coverage as compared to 1,800 MHz band due to its propagation characteristics.

"The current DoT guidelines accept the need for re-farming in principle, but further steps will be taken after the new TRAI recommendations are received," the report said.

The report also said there has to be more clarity on decisions on all matters relating to the one-time excess spectrum charge, including pricing of spectrum in cases of mergers and acquisitions, as well as spectrum sharing.

PTI



First Published: Thursday, February 23, 2012, 23:04


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