DoT may cut upfront payment for spectrum auction

The Department of Telecommunications (DoT) is considering a raft of changes to ease operators’ financial burden from auction of airwaves. Key steps include reducing upfront payment, increasing the tenure of annual payments to 18 years and reducing spectrum usage charges (SUC), said a senior government official. “The department is aware of stress in the sector and one will have to look at ways to ease the financial burden. At the time of buying spectrum, telcos may be asked to pay a lower upfront payment, payment schedules can further be extended from 16 years to 18 years. Other areas like SUCs can be brought down as well,” said the DoT official who did not want to be identified.DoT officials admit that the government is unlikely to reduce the base prices of 5G spectrum for the next auctions, given regulator’s repeated views sticking to its rates.“Reducing rates now looks difficult, despite operators saying that prices are high for them. Who will calculate now what should be the optimum price and how much should be slashed? Most likely, auctions will happen at the current price levels,” said a second DoT official, who did not want to be named.India’s telcos have termed the Telecom Regulatory Authority of India’s (Trai) 5G base price of Rs 492 per MHz expensive, with Bharti Airtel and Vodafone Idea saying they won’t participate at these rates. Trai has been asked by DoT twice to relook at the rates, but both times, the regulator has stuck to its base prices.Reliance Jio is currently running the only profitable mobile services business in India. Coupled with that, the industry is dragged down by a debt of nearly Rs 8 lakh crore.A telecom department official said a maximum of 18 years to pay the annual instalment for bandwidth is an option because the airwaves have a 20-year validity of which the first two years is the moratorium period and therefore, the department can stretch the instalment period for a maximum of 18 years.There are also talks in DoT if SUC, paid on the basis of annual adjusted gross revenue, can be reduced. SUC is currently calculated using a weighted average formula and depends on which auction the spectrum was bought in. “The regulator has been batting for a flat 3% SUC and there are possibilities that the department may have to consider reducing SUC,” said one of the officials quoted above.

from Economic Times https://ift.tt/2LSgI4R