An Indian government cabinet has approved a plan to levy a US$5.7bn surcharge on airwaves held by established operators such as Bharti Airtel.
The Empowered Group of Ministers had already recommended the surcharge on 19 October, but the cabinet made it…
An Indian government cabinet has approved a plan to levy a US$5.7bn surcharge on airwaves held by established operators such as Bharti Airtel.
The Empowered Group of Ministers had already recommended the surcharge on 19 October, but the cabinet made it a law today.
The telecommunications ministry expects that the surcharges will net the government at least US$5.72bn, according to a cabinet note seen by a newswire.
The decision is thought to impact the two state-owned operators the most, alongside established telcos Bharti Airtel, Vodafone India and Idea Cellular.
“Now that it is a legal ruling, I expect all of the operators to go to court to appeal the decision,” a telecoms analyst at an Indian brokerage told TelecomFinance.
“They already pay a higher spectrum charge, so this surcharge is flawed logic. The courts may take a very different stance on it.”
It is not expected that the telcos will have to pay the surcharge in the near future and as the recommendation was already made last month, share prices have not been affected today.
“I don’t think the ruling today will negatively impact share prices going forward,” said the analyst. “It really depends on how the auction actually ends.”
The analyst estimated that Bharti Airtel would have to pay US$800m and Idea Cellular would be charged US$400-420m.
The telecommunications minister, Kapil Sibal, has said that the surcharges are aimed at creating a level playing field between old and new operators, according to media reports.
