DoT Has Amended Licenses to Defer Spectrum Dues Payment

DoT Has Amended 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 installments due for 2020 – 21 & 2021 – 22, operationalising the committee of secretaries’ decision to allow a 2 moratorium.

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

The licensee opting for deferred spectrum installments will continue to securities the next payable annual installment by a financial bank guarantee (FBG) of an amount equivalent to the revised annual installment. A licensee opting for a 2 year deferment, shall provide to the licensor an FBG of the revised annual installment 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 license 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 Bharti Airtel, Vodafone Idea and Reliance Jio 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 crore relief to Bharti Airtel, Vodafone Idea and Reliance Jio. In effect, the benefit accruing to Bharti Airtel would be about Rs 11,746 crore, Vodafone Idea Rs 23,920 crore and Reliance Jio Rs 6,670 crore, sources said.

The necessity of relief emerged after the Supreme Court on 24th October 2019 ordered telcos to pay Rs 1.47 lakh crore 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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