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DoT asks telcos to pay for 5G spectrum sold in June auction

Sources familiar with the matter said the demand notices were sent on July 16 after the Union finance ministry approved them. Moneycontrol has seen a copy of demand notices to all the three telcos

July 16, 2024 / 16:11 IST
According to the notice inviting applications, telecom operators must make the payment within 10 days of receiving the demand note.

According to the notice inviting applications, telecom operators must make the payment within 10 days of receiving the demand note.

 
 
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The department of telecommunications (DoT) has sent demand notices to all three private telecom operators –Bharti Airtel, Reliance Jio and Vodafone Idea – for their spectrum purchases and asked them to pay the amount in 10 days.

Sources familiar with the matter said the demand notices were sent on July 16 after the Union finance ministry approved them. Moneycontrol has seen a copy of demand notices to all the three telcos.

The telecom department has given telecom operators with two payment options, according to DoT documents.

The first option permits companies to make either the full payment or a portion of the upfront payment, covering a minimum of two years and extendable in whole-year increments. Operators opting for this method can benefit from a moratorium corresponding to the upfront payment period. The remaining balance will be paid in equal installments over the remaining term, with annual payments due at the beginning of each year. This ensures the net present value (NPV) of the bid amount is maintained at the applicable interest rate.

These annual installments must be paid on the anniversary of the effective date each year, as stipulated in the notice inviting applications (NIA) document.

The second option entails paying the bid amount in 20 equal annual installments, also maintaining the NPV at the applicable interest rate, with payments required at the start of each year.

Telecom operators are also required to pay the applicable GST on the demands issued by the DoT.

In the recent spectrum auction, which concluded on June 26, Bharti Airtel made a substantial investment, acquiring 97 MHz of 5G airwaves worth Rs 6,856.76 crore. Vodafone Idea also made a notable purchase, securing 30 MHz of 5G spectrum for Rs 3,510.40 crore. Reliance Jio, on the other hand, made its lowest-ever investment in spectrum auctions, buying spectrum worth Rs 973.62 crore.

According to the notice inviting applications, telecom operators must make the payment within 10 days of receiving the demand note. Spectrum can then be allocated within 30 days after they make either the first instalment or the full payment, depending on their chosen option.

Bharti Airtel and Vodafone Idea have renewed spectrum in circles where permits were expiring, receiving provisional spectrum in those areas. The government raised a modest Rs 11,340.78 crore from its second 5G spectrum sale, with Bharti Airtel emerging as the top buyer amid predictably subdued bidding activity.

Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

Danish Khan
Danish Khan is the editor of Technology and Telecom. He was previously with the Economic Times and has tracked the sector for 13 years.
first published: Jul 16, 2024 03:17 pm

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