The Finance Ministry’s hopes of receiving upfront payment for spectrum sold in the recently concluded auction have been dashed.

Most operators, which won the auction, have told the Department of Telecom that they will pay only 33 per cent of the bid amount upfront while the balance will be paid in instalments.

Vodafone India, which had won additional spectrum in 14 circles, has written to the DoT to this effect. Vodafone had bid Rs 1,128 crore for the 14 circles.

ECB norms relaxed

The Finance Ministry had relaxed norms for external commercial borrowings (ECB) to enable auction winners to pay for spectrum upfront.

The move was aimed at helping operator companies participating in the auction raise cheaper funds to pay for the spectrum. The Ministry was hoping this would prompt the operators to pay the entire bid amount upfront instead of paying in instalments.

The Finance Ministry has set a target of Rs 40,000 crore by selling spectrum during the current fiscal. But the actual collection was only Rs 9,407 crore due to lukewarm participation. But the auction rules allow operators to pay 33 per cent of the fee upfront and then a moratorium of two years. The balance can be paid in 10 annual instalments from the third year.

Most of the bidders have opted to pay the money in instalments despite having to pay a higher interest rate compared to the ECB route. This will further dent the Finance Ministry’s calculations as it was betting on good collections from spectrum to bridge the fiscal deficit. The auction had finished in just two days. The final price of spectrum was same as the reserve price in 21 out of the 22 circles. Of the 176 blocks of spectrum (each block equal to 1.25 MHz) put up for sale, only 101 slots received bids.

>thomas.thomas@thehindu.co.in

Related Topics