Telcos’ spectrum bill at ~3 lakh crore

The current stress in the telecom industry has prompted the government to work out the math on spectrum money the operators will have to pay over the next 10 years, inclusive of interest.

An internal estimate by the Department of Telecommunications (DoT) suggests around ~3 lakh crore should come from telcos till 2028-29 as deferred payments for the spectrum they acquired in the recent auctions, a source told Business Standard.

While ~9,486 crore is expected as payment along with interest during the current financial year, the amount will increase to ~24,619 crore in 2018-19 and to ~30,885 crore every year for the next six years. In 202526, the amount payable to the government will come down a bit to ~29,897 crore, and then decrease in the next two years to ~21,545 crore each, and in 2028-29 to ~6,412 crore.

Telcos have to pay around ~3.26 lakh crore for airwaves acquired in auctions since 2010. Of this, they have paid about ~1.64 lakh crore and the remaining ~1.61 lakh crore is scheduled to come in the next 10 years. However, the interest will push up the outstanding amount to ~2.99 lakh crore, estimates show.

DoT officials are learnt to have recently apprised Telecom Minister Manoj Sinha about the deferred payments, in the backdrop of the debt crisis in the industry.

In the 2010 auction, the entire amount was paid upfront. Subsequently, the upfront payment was reduced to 25 per cent and 33 per cent for different frequency bands. The remaining amount was to be paid in 10 instalments after a two-year moratorium.

The interest rate, 10 per cent in earlier auctions, was also decreased to 9.3 per cent in the last bidding process in 2016.

Latest entrant Reliance Jio, which is alleged to have disrupted the telecom space with its deep discounts and low tariffs, recently blamed the deferred payment option as the reason for sky-rocketing prices of spectrum. Jio said operators bid aggressively for airwaves because they didn’t have to pay the entire amount upfront.

PAYMENT SCHEDULE

DoT has given a schedule for deferred payments to be made by telcos for spectrum purchased in auction

Year Amount(~cr) 2017-18 9,486.0 2018-19 24,619.0 2019-20 30,884.7 2020-21 30,884.7 2021-22 30,884.7 2022-23 30,884.7 2023-24 30,884.7 2024-25 30,884.7 2025-26 29,897.0 2026-27 21,545.5 2027-28 21,545.5 2028-29 6,412.1 >

To fund their spectrum purchases, telcos took loans, thereby increasing their debt.

The telecom sector, in the midst of a financial stress, is holding meetings with the government to get a breather. Operators have demanded a wider payment duration for spectrum, preferably for the remaining period of validity of spectrum. They have also sought reduction in levies like licence fees and spectrum usage charges.