Spectrum Sale May Not Generate Enough Income for The Government

Spectrum Sale May Not Generate Enough Income for The Government

The government might generate direct payments of solely around Rs 10,000 crore from spectrum auctions within the next financial year beginning April 1, given the monetary challenges faced by 2 major telecom companies Bharti Airtel and Vodafone Idea, telecommunication department officers have predicted, according to a report by The Economic Times.

This implies that following spectrum sale may fetch it just around Rs 35,000-40,000 crore overall as against the Rs 5.86 lakh crore price of airwaves that the Govt. desires to place on sale at base value, experts said.

Telecom companies pay advance 25 per cent for the sub-1 GHz band and 50 per cent for higher bands they win in auctions. The remaining balance is paid over 16 years in equal part payments.

This means in the absence of the adjusted total revenue dues, the govt. will fall way in need of its Rs 1.33 lakh crore budgeted for next financial year, with just Rs 20,000-25,000 crore predicted to come from license fees and spectrum usage charge.

Airwaves across the 4G bands of 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2100 MHz, 2300 MHz, and 2500 MHz, besides 5G spectrum within the 3300-3600 MHz bands, are going to be offered to Vodafone Idea, Bharti Airtel and Reliance Jio.

The auction, expected within the first quarter of the next financial year, can see some 8,293.95 MHz of airwaves at an approximated total base value of Rs 5.86 lakh crore.

The government had cleared a base value for 5G airwaves at Rs 492 crore per MHz and projected the sale of a minimum 20 MHz blocks, which might mean a telecom company would have to pay near to Rs 50,000 crore for 100 MHz — the quantum it has to provide quality 5G services.

For the 700 MHz band, that was unsold at the previous auction, the DoT has cut the base value by 43 per cent to Rs 6,568 crore a unit, or Rs 32,840 crore for a block of 5 MHz.

Already weighed down by debt of over Rs 7 lakh crore, loss-making telecom companies Vodafone Idea and Bharti Airtel are currently facing over Rs 53,000 crore and Rs 35,000 crore in adjusted total revenue dues after a Supreme Court order last October.

Posted by

    Neelam Jaiswal is a former editor of Ub News and has a lot of experience in business news. She is managing business news on My Office Hub. Reach her on neelam@myoffice-hub.com

    Related Posts


    Enter your keyword