Bank guarantees not needed to cover for spectrum instalments: DoT

The telecom department has removed the need for financial bank guarantees to cover for annual spectrum instalments as well as performance bank guarantees for roll out obligations from future auctions. In a notice, it said it will accordingly change the eligibility conditions for participation in the next sale, so that bidders have sufficient financial capacity.

"For spectrum auctions to be held in the future, the requirement for the successful bidder to submit a financial bank guarantee (FBG) of an amount equal to one annual instalment to scrutinise the instalment; and to submit performance bank guarantee (PBG) for roll out obligation, etc has been dispensed with," the Department of Telecommunications (DoT) said in the notification.

The DoT has also sought the Telecom Regulatory Authority of India's recommendations on upfront payment requirements, moratorium period, number of deferred payment instalments, after extending the tenure of the right to use airwaves to 30 years from 20 years now. It added that auctions will be held in FYQ4 each year, but can be held at shorter intervals if needed. Telcos have also been allowed to surrender spectrum after 10 years. But they will have to inform the DoT a year before surrendering. An "appropriate surrender fee" will be charged.

"However, the spectrum purchase dues for the remaining (post surrender) period will not be levied," DoT said. The DoT added it has sought the sector regulator's recommendations on the surrender conditions and the fee. "For spectrum acquired in future auctions, no spectrum usage charge will be levied. The condition of a minimum 3% weighted average SUC rate and SUC floor amount will also be removed," it said.