On March 6th, the Financial Express (FE) reported that the Government of India (GOI) is considering a spectrum usage charge (SUC) waiver for all operators on spectrum acquired in auctions held before 2022. Readers may recall that as part of the telecom relief package introduced a few years ago, the government set the SUC for all spectrum acquired in auctions from 2022 onwards at 0%. The rationale behind this move was simple: once spectrum is purchased through an auction, imposing an additional usage charge on top of the auction outflows lacked economic justification.
This policy led operators to aggressively acquire spectrum in the 26 GHz band, as its lower per MHz cost helped drive down their weighted average SUC rate. The formula for computing SUC applied equal weight to all spectrum bands, despite older bands having lower quantum but higher individual rates. As a result, acquiring a large amount of 26 GHz spectrum significantly reduced SUC obligations. This played a crucial role in the 2022 auction dynamics, where Bharti acquired spectrum almost for free, and RJIO effectively paid only 50% of their total auction outflows due to SUC savings. Vodafone Idea (Vi), however, benefited less from this strategy, as it acquired a smaller quantum of 26 GHz spectrum.
