Department of Telecommunications yet to take call on upfront payment for 4G spectrum sale

The Department of Telecommunications is preparing a draft Cabinet note for the next 4G spectrum auction, but is yet to circulate it for inter-ministerial consultations as it grapples with issues such as upfront payments and bidding interest from c...

New Delhi|Mumbai: The telecom department is yet to decide if upfront payment should be collected from mobile phone companies that buy 4G spectrum in the next auction, given that operators have been exempted from paying for airwaves for two years till FY22.

“This issue will need to be ironed out and the outcome may depend upon the inter-ministerial consultation,” a senior government official told ET. The matter of upfront payments will also be relevant in the sale of 5G spectrum expected to take place in 2021, officials said.

The Department of Telecommunications is preparing a draft Cabinet note for the next 4G spectrum auction, but is yet to circulate it for inter-ministerial consultations as it grapples with issues such as upfront payments and bidding interest from cash-strapped and debt-laden telcos.


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“Can the government, or rather, should the government charge an upfront payment from telcos in such a situation and should they be allowed a moratorium on airwaves purchased in these auctions also? These will need to be thought out,” the official said. In November, the Cabinet granted telcos a moratorium on payment of spectrum-related dues for 2020-21 and 2021-2022 to give them financial relief to the tune of about Rs 42,000 crore. The next payment for spectrum is due only in FY23.

For Vodafone Idea (Vi), this meant postponing payment of Rs 23,920 crore and for Airtel, it was a Rs 11,746 crore relief. Reliance Jio, the only profit-making telco in India, could delay payment of Rs 6,670 crore to the government.

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DoT was keen to hold the next sale of 4G airwaves in October, but with matters such as the adjusted gross revenue crisis and the issue of upfront payments, the auction may now be held in December or early next year, another official said. A telco needs to pay 25% to 33% of its winning bid within a month of the auction ending.

The next 4G auction is more critical for Jio than its rivals. Under a sharing pact, Jio uses a sizeable chunk of Reliance Communications’ 4G airwaves in the coveted 800 MHz band, which expires in 18 telecom zones in July-August 2021.

The 4G bands on offer, especially 700 and 800 MHz, can be used for next-generation 5G technology once that ecosystem develops, experts said.
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