DoT hands lifeline to India’s beleaguered telcos, offering 2 year deferral of spectrum dues

Published: 9 February 2020 - 7:30 a.m.

India’s Department of Telecoms has confirmed that telcos in the country will be able to defer payment of their spectrum dues, formalising its earlier proposal to grant a two year payment moratorium.

A report in the Economic Times of India states that telcos will be able to defer payment of spectrum dues relating to licences for 2020-2021 and 2021-2022.

"The licensee may opt to defer the spectrum auction instalment due for 2020-21 and 2021-22, either for one or both years. The deferred amount will be equally spread over the remaining instalments to be paid, without any increase in the time specified for making the instalment payments. Interest shall be charged to protect the NPV of the payable amount," the Department of Telecoms said in a public statement.

"The licensee opting for deferred spectrum instalments will continue to securitise the next payable annual instalment by a financial bank guarantee (FBG) of an amount equivalent to the revised annual instalment. A licensee opting for a two-year deferment, shall provide to the licensor an FBG of the revised annual instalment amount payable in 2022-23, valid for the entire two-year duration of the deferment."

According to the ET report, the ruling could provide significant relief to all three of the country’s mobile network operators, freeing up vast sums of cash in the short to medium term.

The total savings could be as much as $5.8 billion (INR 42,000 crore), with Vodafone Idea set to benefit to the tune of $3.3 billion (INR 23,920 crore). Bharti Airtel and Reliance Jio will also receive sizable relief, freeing up $1.6 billion (INR 11,746 crore) and $923.8 million (INR 6,670 crore) respectively.

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