Govt’s spectrum income to plunge more, bidders to opt for deferred payment option

The Government’s income from the recently concluded 2G spectrum auction in the 1800 MHz band is set to plunge more, as the top three bidders would not pay anything in the next three years. Last month, the EGoM on telecom allowed telcos to offset their 2008 license fee against their bid amounts in the current airwaves sale, which means that the government would not receive a single penny in the next three years from these telcos.

Norwegian telecom company Telenor has bought spectrum for Rs 4,018 crore, out of which it has to pay Rs 1,325 as upfront amount. However, the refund amount for fee Telenor paid in 2008 for permits is around Rs 1,658 crore, which will be used to offset the 33 percent upfront amount.

Videocon Telecommunications has bought spectrum for Rs 2,222 crore and the amount of refund is Rs 1,500 crore, which will offset the upfront amount worth Rs 733 crore. Idea Cellular has acquired the spectrum for Rs 2030 crore, and the payable upfront amount is Rs 677 crore. The refund Idea Cellular is getting is Rs 1170 crore, which will offset the upfront amount.

All these companies will opt for the deferred payment option and offset their upfront amount.

It is expected that the Government may only get only Rs 380 crore this fiscal towards spectrum fee, against its target of Rs 40,000 crore. Apart from above mentioned companies Vodafone and Bharti Airtel will only be paying the spectrum fee to the Government. Given the situation, the Government now would not be able to meet the revised fiscal deficit target of 5.3 per cent of GDP.