In a development that would hit telecom operators' profits, the government announced an up to 50 per cent increase in spectrum charges for all GSM and CDMA technology based service providers.
The increased spectrum charges would be effective April, this year, according to an official order/notification. Telecom service providers have to pay a percentage of their adjusted gross revenue (AGR) to the government as spectrum usage charge.
This charge depends on the quantity of spectrum allotted. The new charges vary between 3-8 per cent depending upon the quantum of airwaves held by the respective operators. As per the new charge, an operator holding spectrum up to 4.4 Mhz will be paying 3 per cent of the AGR compared to two per cent now.
Most of the incumbent players other than those who got licences in January 2008 are having more that 4.4 MHz of spectrum. Similarly, for CDMA players with spectrum up to 5.0 Mhz will now have to pay three per cent of their AGR as spectrum charge instead of two per cent earlier.
The increase in spectrum charges will put pressure on the profits of the telecom operators who are already struggling to protect their revenues in the wake of intense competition due to entry of new operators in the field.
