New Delhi, Jan 31 (IANS): The union Cabinet Friday approved spectrum usage charges (SUC) at five percent of annual gross revenue (AGR) for mobile telephone service providers who are all set to buy airwaves in the Feb 3 auction, an official statement said here.

"The spectrum acquired in the current auction will be charged at 5 percent of the AGR. In cases of combination of existing spectrum in this band and spectrum acquired through the auction, the weighted average will apply to all the spectrum held by the operator in 900 MHz and 1,800 MHz band,” the release said.

It clarified that the licensees who do not acquire spectrum in this auction will continue to pay SUC according to the existing slab rate.

Earlier in the week, an Empowered Group of Ministers decided to charge the telecom service providers 5 percent of the AGR as SUC. The decision was then sent to the union Cabinet for approval.

The SUC is levied annually as a percentage of revenue earned by telecom companies, which varies from 3-8 percent. The Telecom Regulatory Authority of India had earlier suggested a uniform 3-5 percent fee from April 1 across the telecom services for a successful next round of spectrum auction.

In 2012-13, the government's revenue collection from SUC was Rs.5,689 crore.

Regarding the Broadband Wireless Access (BWA) spectrum, the Cabinet decision said: “In respect of BWA spectrum acquired through auction in 2010, SUC will continue to be charged, as per present practice, and the operator would be required to report the revenue earned from BWA spectrum separately.”

Eight telecom service providers have applied to take part in the second generation (2G) spectrum auction slated for Feb 3.

The companies are Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone, Telewings, Aircel, Tata Teleservices and Idea Cellular.

The total spectrum to be put on auction is 46 MHz in 900 MHz band and 403.2 MHz in 1,800 MHz band.

The government expects to mop up Rs.40,874.50 crore from this spectrum auction.