The Ministry of Finance has raised objections against Department of Telecommunications' move to levy one per cent additional revenue from the successful bidder of 3G spectrum, believing this is way too low.
The Department of Economic Affairs (DEA), which falls under the Ministry of Finance, in a letter to the DoT has stated that this might also lead to the artificial suppression of 2G revenues. It has also sought of setting up a group, with representation from the Department of Economic Affairs (DEA), to revisit the proposal.
The finance ministry is of opinion that levying of 1 per cent incremental revenues will lead to practical problems, like "creative accounting", mainly in 2G revenues".
This is because the DoT had decided to levy 1 per cent of Adjusted Gross Revenues (AGR) after one-year period from the successful operators' of 3G spectrum.
This is way below the existing 2G spectrum charges that are in the range of around 2-5 per cent (depending on the quantum of spectrum allocated). This would result in companies under-invoicing of 2G spectrum prices or terming it as 3G revenues, as 3G revenues are much lower than 2G revenues.
The DEA has suggested setting up of a group to examine options on an urgent basis and to take measures that is agreeable to all stakeholders in the industry.
The ministry also wanted completion of the 3G and Broadband Wireless Access (BWA) spectrum auction, which is already delayed, at least by December 31, 2008. The DoT had earlier stated that the spectrum allocation would begin by the end of this month and would be completed by the end of this year.
According to industry analysts, who sought not to be named, said that 1% AGR on 3G spectrum is comparatively on the lower side and this needs to be hiked. This is because the revenues from 3G services would be much more – as it involves both data and voice – and should be levied on a higher basis. |
