Spectrum Auction: DoT Issues Demand Notes for Payment to Telcos

Department of Telecommunications issued Demand Notes for payments for the frequencies sold to three telcos in the recently concluded spectrum auction on Monday. Notably, the Director of Wireless Planning and Finance, laid out the method of payment and all the deferral options. Incidentally, the three largest telecos were the ones to participate in the auction that was concluded on 2nd March. Moreover, these three bought frequencies worth more that Rs. 77,000 Crores, overbuying from the Government's estimate of Rs. 50,000 Crores.

In the recently concluded auction, Reliance Jio was the largest buyer with purchase of more than Rs. 57,000 Crores. Bharti Airtel was a distant second with spending of Rs. 18,000 Crores and Vodafone Idea did a purchase of just over Rs. 1,000 Crores.

Spectrum Auction Payments for Bharti Airtel

Bharti Airtel has a total payable amount of Rs. 18,703 Crores. Since no one is able to fork that kind of money out, Bharti Airtel will go for payment deferral under Section 6.1(b) of NIA (Notice Inviting Application).

In order to complete the payment, DoT has first asked the telco to pay Rs. 6,323 Crores upfront immediately. After that, Airtel will pay a further Rs. 6,634 Crores upfront payment, at a later date. Depending on the circle in which auction is won, the Sunil Mittal-led telecom operator will be paying the consolidated amount latest by 4th September.

Furthermore, annual installments are there for the second largest telecom operator to clear all the dues. Also, the telco is receiving a moratorium of 2 years from the day of the payment of the first upfront payment. Lastly, the payments will be made via RTGS.

Spectrum Auction Payments for Reliance Jio

Reliance Jio was the biggest buyer at the auction, bagging an inventory of frequencies across 22 circles. As such, it is liable to pay a total of Rs. 57,124 Crores, excluding GST. Reliance Jio will also take payment deferral and DoT has detailed it out as follows.

The largest telco in the country will have to shell out Rs. 15,019 Crores upfront immediately. After this payment, the second upfront payment is of Rs. 4,919 Crores. The consolidated payment across 22 circles needs to be paid before 4th September, depending on the circle. Just like in the case of Bharti Airtel, Reliance Jio will also get a moratorium of 2 years starting from the day of its first upfront payment. After that, the the telco will clear the dues in annual installments.

Spectrum Auction Payments for Vodafone Idea

Vodafone Idea bought spectrum worth just shy of Rs. 2,000 Crores, and that is its liability to DoT, sans GST. As it will also go for payment deferral, the telco is directed to pay Rs. 574 Crores upfront immediately. After this is done, the third largest operator will pay another Rs. 103.5 Crores in the second upfront payment later on. Again, it will receive a moratorium of 2 years from the first upfront payment. Finally, it will clear the rest of its dues in annual installments.