Operators in India are in for a tough time. Faced with severe competitive market forces which under the pay per second regime are already denting a bloody blow to their profitability, such operators will now to have cope up with additional cost as the government hiked the spectrum charges for the upcoming new fiscal.

Operators will now be required to pay spectrum charges in the range of 3% to 8 % of their total adjusted gross revenue (AGR).

According to the new structure, GSM service providers will be required to pay 3% of their AGR as annual spectrum charges for spectrum held upto 4.4 MHz. Presently they are required to pay 2%. For spectrum held up to 8.2 MHz, operators will now have to shell out 5% of their AGR as opposed to 4% being paid currently.

The most significant impact will be on those circles where incumbent operators have spectrum up to 10.2 MHz and 12.2 MHz. here the operators will be required to pay 6% and 7% of AGR respectively as compared to 4% and 5% being paid respectively in the existing structure. For spectrum beyond 15.2 MHz, the new spectrum charges will be 8% of AGR as compared to 6% presently.

For CDMA operators, the spectrum charges will be 3% of AGR for spectrum held up to 5MHz while currently the levy is 2% of AGR. For spectrum held up to 10 MHz, the charges will be 8% as compared to 6% presently.

The new hike by the government will impact incumbent GSM operators the most as these operators hold additional spectrum in most of the circles. Bharti Airtel pays the highest amount in terms of spectrum charges amongst all the operators. It paid Rs 301.49 crore in way of spectrum charges for the December 2009 quarter.

CDMA operators, Tata Teleservices and Reliance Communications paid Rs 39.45 crore and Rs 43.01 crore respectively as spectrum charges.