Govt. Within Its Rights To Hold Spectrum Auction, But Older Telecom Firms Unlikely To Bid: COAI

The government is well within its rights to hold spectrum auction in the current financial year if it so desires, but old operators, reeling under the impact of Supreme Court’s ruling on statutory dues, are unlikely to participate, Cellular Operators Association of India said.

“The government can hold the auction if it wants, the larger question is who will turn up for bidding given the present financial situation,” the industry body’s Director General Rajan Mathews told PTI.

Mathews said given the latest adjusted gross revenue judgment from the apex court and the sector’s deep crisis, the older operators are unlikely to have the wherewithal to bid for spectrum.

Still, the government is well within its right to hold the auction. If the auctions are indeed held, then the government should ensure there is no monopoly in acquisition of spectrum.―Rajan Mathews, Director General, COAI

Explaining this, he said with regard to spectrum in 3.3-3.6 GHz band, where only 175 MHz is available for all 5G aspirants, a single operator should not be allowed to walk away with 100 Mhz.

“At some point when the competitive landscape changes, 5G spectrum should be available for the operators who wish to go for it in the future,” Mathews said.

There is still no official word recently on whether the spectrum auction timelines – previously expected by early next year – will be altered in the wake of the apex court order, that upheld the government’s way of calculating revenue of telecom operators – on which statutory dues like licence fee and spectrum usage charges are computed.

As per the initial calculations, firms like Bharti Airtel Ltd., Vodafone Idea Ltd. and other telecom operators may have to pay the government a whopping Rs 1.42 lakh crore within three months.

Bharti Airtel faces a liability of around Rs 42,000 crore after including licence fees and spectrum usage charges, while Vodafone Idea may have to pay about Rs 40,000 crore. Reliance Jio Infocomm Ltd. may have to pay around Rs 14 crore. The remaining liability is with state-owned twins – Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. and some of the shut/bankrupt companies.

The Department of Telecom is also now studying whether the apex court order also impacts any other company which uses spectrum or has a licence. Discussions are going beyond the scope of 4-5 pure play telecom access providers.

DoT sources said that in select categories, demand notices may be issued as early as in 1-2 days, but for larger telcos the numbers are still being calibrated and verified and will take a few weeks.

Amid reports that the government may look at lowering the reserve price of spectrum by 40-50 percent, the source in the DoT maintained that there is no decision on those lines at present.―Bloomberg Quint