Vodafone Idea’s relief hopes fade as DoT puts spectrum surrender on hold

New Delhi: The department of telecommunications (DoT) has put on hold its proposal to offer telecom operators the option of surrendering airwaves bought before the 2022 auctions, a move which deals yet another blow to Vodafone Idea after the recent government decision not to waive interest and penalties related to adjusted gross revenue dues.

The development came amid demands by Bharti Airtel and Reliance Jio that the government have a clause for refund of the money that they have fully paid up for the spectrum bought before 2022 but could have now surrendered, said officials aware of the matter.

Vodafone Idea was hoping to immediately surrender some spectrum bought before 2022 and use it partly to pay for bank guarantees in the near future. Surrender of excess airwaves could have reduced the telco's government obligations by ₹30,000-₹40,000 crore, depending on the quantum of spectrum returned. Officials said the move to allow surrender of spectrum would have involved a complicated process to change the rules of auctions conducted before 2022, which was also a deterrent.


"The conditions of notice inviting applications (NIA) would have to be changed for spectrum surrender. That, too, could have been considered, but then having the provisions for refund and adjustment against other levies would have been legally difficult," said one of the officials, who did not wish to be identified.

Another official said the companies were informed that the plan to surrender spectrum could only be considered if it was legally tenable. Queries sent to Bharti Airtel and Reliance Jio remained unanswered till press time.

ET had reported earlier this month that Jio and Bharti Airtel had asked the DoT to create a level playing field while framing the new spectrum surrender policy instead of one that benefits a single telecom operator.

While the spectrum surrender policy was to be applicable to all, Vodafone Idea would have been the biggest beneficiary.

Jio doesn't have much excess airwaves and has cleared ahead of time most of its payments for past spectrum purchases. Bharti Airtel, though, has some excess airwaves in bands like 2100 MHz in a few circles that can be returned, but since the payments are cleared in case of surrender, the amount must be refunded.

Vodafone Idea, on the other hand, has to pay ₹1.57 lakh crore to the government for spectrum purchases and the majority of dues relate to the 2022 auctions. The telco has 8,030 MHz of spectrum across several bands and says it has the most airwaves per million subscribers in the industry.

The telco had recently written to the DoT that if it could surrender some spectrum acquired in auctions before 2021, its securitisation or bank guarantee (BG) requirement for the airwaves bought in March 2015 would drop to ₹2,900 crore from the current ₹6,091 crore. Vodafone Idea suggested some alternatives to the government to address the securitisation requirement, considering a ₹9,900 crore excess payment made for the 2016 auction, or another ₹8,800 crore made during 2012 and 2014 auctions, to offset 2015 shortfall.

The loss-making telecom operator recently told the DoT that its financial position did not allow it to furnish either a ₹6,091 crore bank guarantee or pay ₹5,493 crore in cash towards a payment shortfall for the 2015 purchase.