AGR issues likely to cloud telco spectrum auctions

There was no auction in 2017-18 and 2018-19

The row over adjusted gross revenue (AGR) in the telecom sector may cast a shadow over the proposed spectrum auctions as the companies which are expected to participate in the bidding are yet to gather clarity on the matter. Experts feel that if they made payments towards AGR settlement, the firms would grapple with funds for purchasing airwaves.

Besides buying spectrum for 4G and 5G services, mobile service providers are expected to make capital expenditure towards deployment of those airwaves.

“Deploying 4G and 5G spectra is a capital intensive exercise and currently no company is in a position to do that. VodafoneIdea is yet to integrate spectra and Bharti Airtel has been consistently de-leveraging itself. Only Reliance Jio may look at the option of buying spectrum but even it said that the current prices are too high,” said a Mumbai-based analyst.

When asked, officials at the Department of Telecommunications said the process for the spectrum auction was on track.

The date for the Digital Communications Commission (DCC) meeting is yet to be finalised and it will essentially decide the course of the spectrum auctions. Usually, DCC meetings are held once in two-three weeks to take critical decisions regarding the telecom sector. The last such meeting was held in September, where Telecom Secretary Anshu Prakash, who heads the DCC, had said the process for the spectrum auctions was on track.

The central government has not decid

ed the auctioneer for conducting the bidding, even as Telecom Minister Ravi Shankar Prasad recently said the government would conduct the spectrum auctions in the current financial year.

There was no auction in 2017-18 and 2018-19. In 2016-17, the Union government raised ~65,789 crore through the sale of spectrum. Total spectrum put up for sale was 2,354.44 MHZ across seven bands, buy the government managed to auction only 965 MHZ or 41 per cent of the total airwaves.

However, the recent ruling by the Supreme Court may put a spanner in the auction programme as AGR payments,

along with interest and penalty, would burn a hole in the pockets of telecom companies like Bharti Airtel and Vodafone Idea.

In a blow to telecom operators, the Supreme Court on October 24 rejected their petition to revise the government’s definition of AGR and refused to give them any relief on the pending payment of around ~1.33 trillion.

The apex court has given telecom companies three months to comply with its order, upholding the government’s definition of adjusted gross revenue (AGR), and asked them to file a compliance report after depositing the money.