India Cabinet Approves One-Time Spectrum Fee for Telecom Companies - Minister

   By Mukesh Jagota and R. Jai Krishna 
 

NEW DELHI--India's federal cabinet on Thursday approved a proposal to levy a one-time fee on telecommunication companies holding excess airwaves beyond a specified limit, according to a senior minister.

A panel of Indian ministers had recommended that mobile phone companies be charged a one-time fee for the excess frequency they own beyond a cap set by the country's telecom regulator, the minister, who declined to be named, told Dow Jones Newswires.

The ministerial panel on bandwidth had suggested levying a total fee of about 305 billion rupees ($5.6 billion) on all of the companies exceeding the spectrum cap. The final fee will be based on the prices fetched at a bandwidth auction to be held by the government later this year.

Telecom operators that will be affected include Bharti Airtel Ltd. (532454.BY), Idea Cellular Ltd. (532822.BY), the Indian unit of Vodafone Group PLC (VOD.LN), Reliance Communications Ltd. (532712.BY), Mahanagar Telephone Nigam Ltd. (500108.BY) and Tata Teleservices Ltd.

Telecom companies have strongly opposed the fee, arguing it will hurt them at a time when their profits are under pressure from stiff competition and interest costs on the debt they took in 2010 to pay for third-generation bandwidth.

Write to Mukesh Jagota at [e-mail] and R. Jai Krishna at [e-mail]

Subscribe to WSJ: http://online.wsj.com?mod=djnwires