DoT Amends Licenses to Defer Spectrum Dues Payment

The Department of Telecom (DoT) has amended the unified access services license to defer payments of the spectrum auction instalments due for 2020-21 and 2021-22, operationalising the committee of secretaries‘ decision to allow a two-year moratorium.

“The licensee may opt to defer the spectrum auction instalment due for 2020-21 and 2021-22, either for one or both years. The deferred amount will be equally spread over the remaining instalments to be paid, without any increase in the time specified for making the instalment payments. Interest shall be charged to protect the NPV of the payable amount,” said in a communication to telecom licensees.

“The licensee opting for deferred spectrum instalments will continue to securitise the next payable annual instalment by a financial bank guarantee (FBG) of an amount equivalent to the revised annual instalment. A licensee opting for a two-year deferment, shall provide to the licensor an FBG of the revised annual instalment amount payable in 2022-23, valid for the entire two-year duration of the deferment,” it said.

The amendment, which comes into force with immediate effect, shall be part and parcel of the unified access services licence agreement and all others terms & conditions shall remain unchanged.

The Cabinet in November had approved the committee of secretaries‘ (headed by Cabinet Secretary Rajeev Gauba) decision giving , , and an option to avail of a two-year moratorium on payments they were supposed to make for the spectrum bought.

The move could give Rs. 42,000 crores relief to Bharti Airtel, Vodafone Idea, and Reliance Jio. In effect, the benefit accruing to Bharti Airtel would be about Rs. 11,746 crores, Vodafone Idea Rs. 23,920 crores and Reliance Jio Rs. 6,670 crores, sources said.

The necessity of relief emerged after the Supreme Court (On October 24) telcos to pay Rs. 1.47 lakh crores in past statutory dues after considering non-telecom revenues for their calculation. It dealt a big blow to telcos, already bruised with losses and by the intense competition unleashed by Reliance Jio since September 2016 through its free and cheap services.

Since it was not possible for the DoT to grant any waiver of interest and penalties on the dues since it was a legal issue, the government set up the committee of secretaries to give moratoriums on spectrum auction dues payment.

Finance Minister Nirmala Sitharaman had said after the deferment, the payments would be equally divided over the rest of the payment term and the telcos would have to pay interest on it as well as back them with bank guarantees.

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