USO Reduction + Spectrum Charge Increase to be Delayed

Media reports indicate that the DoT’s decision to reduce the USO levy by 2% for operators reaching 95% coverage (effective April-09) has been delayed due to elections. However, this also means that the final notification for the increase in spectrum charges is likely to be delayed on similar grounds. Net-net status quo remains with the final decision to be taken by the new government formed.

Just to refresh, TRAI, in Dec-08, had toed DoT’s line for increasing spectrum charges by 1-2% of AGR across the various bands. It had, however, recommended that the higher % of AGR be based on only the 2G spectrum held even for those holding 2G+3G (post auction).

While having an impact on GSM incumbents’ margins by ~1.5%, it largely will be offset by the DoT’s decision to reduce the USO levy by 2% for operators reaching 95% coverage. Bharti, with the widest coverage, will benefit almost immediately once
approved.

Author: Webmaster