Govt budgets in Rs 21,000 cr from telcos as arrears

Arrears include realisation from one time spectrum charge currently under litigation

The government expects total revenue from communication services to be at Rs 98,995 crore for 2016-17, but experts have raised concern over the budgeted amount for arrears from telecom players at around Rs 21,000 crore.

According to officials in the ministry for communications and IT, the arrears include realisation from one-time spectrum charge (OTSC), which though is currently under litigation.

Brokerage firm Credit Suisse, in a note, also said government expects one-time spectrum fees of Rs 20,000 crore — this has been a recurring fixture for the past few years — not being realised.

In 2013, the department of telecommunications (DoT) had raised demand of OTSC from operators for using spectrum over 4.4 MHz till 2013. The amount that DoT will get from OTSC is estimated to be Rs 20,000-25,000 crore, according to their calculations.

The one-time charge was earlier approved by the United Progressive Alliance government to bring a level-playing field with the newer operators who had to buy spectrum through the auction. However, this was challenged by telecom players in various courts and the matter is still pending in courts.

Also, Credit Suisse said according to their calculations, the government is likely to budget Rs 1,62,500 crore spectrum sale from the auctions — 25-30 per cent of which would get paid immediately and form part of revenue receipts for the year. This also means about 30 per cent of value of spectrum on offer gets sold at Telecom Regulatory Authority of India (Trai) reserve prices.

“This assumes at least a partial success of 700 MHz spectrum (as the value in all other spectrum bands is less than $20 billion). If the government achieves these numbers, it would be a significant negative for the sector. A realistic number would probably be half this amount,” the note said.

Many operators have said the prices of spectrum in 700 MHz band are unrealistic and they might not bid for it in the auction. In 2014-15, the government had earned revenue of Rs 1.1 lakh crore from spectrum auction. Trai gave its recommendation in January this year on auction for spectrum in various bands — including the premium 700 MHz for the first time, at a reserve price of Rs 11,485 crore per MHz. This is the highest reserve price fixed for a band since the process for spectrum auction started nearly five years earlier.

The 700 MHz band is considered a good one for mobile broadband and fourth-generation (4G) technology services. It is much sought after for long-term evolution deployment around the world, due to its efficiency and higher penetration inside buildings. Existing operators had opposed the auction of 700 MHz.

DoT plans to commence the spectrum auction by June-July.

The total revenue at Rs 98,995 crore is the double of what DoT had expected in 2016-17. In a presentation for the Budget, it had said it expected revenues of Rs 49,214 crore for 2017, out of which Rs 16,000 crore was from spectrum auction and  Rs 9,500 crore from instalment from the previous auction.