DoT to issue demand notes to telcos on upfront payment for spectrum

The Department of Telecommunications (DoT) will issue demand notes to telcos next week on an upfront payment for spectrum acquired in the just-concluded auctions, sources said.

The demand note follows auctions raking-in winning bids of over ₹77,800 crore, for 855.6 MHz of spectrum. Billionaire Mukesh Ambani's Reliance Jio spent the most in the auction, picking up 488.35 MHz spectrum in bands such as 800 MHz, 1800 MHz and 2300 MHz for ₹57,122.65 crore.

Bharti Airtel bid about ₹18,699 crore to acquire 355.45 megahertz (MHz) out of the total 855.60 MHz of radiofrequency acquired by all telcos, while Vodafone Idea, bought 11.80 MHz of spectrum worth ₹1,993.40 crore.

DoT sources told PTI that the demand notes will be sent out to the three companies this week, and entails largely the upfront payment for spectrum that is ready to be allocated.

Spectrum will be offered for assignment for a validity period of 20 years. As per the auction terms, successful bidders can pay entire bid amount in one go, or exercise an option to pay a certain amount (25 per cent for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50 per cent for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront with remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years.

A DoT official said the demand notes together total about ₹20,000 crore, but did not provide operator-wise break-up.

About 2308.80 MHz of spectrum that carry telecom signals in seven bands worth nearly ₹4 lakh crore at start price, was up for bidding in the auction held recently. Although the spectrum finally acquired by telcos fell woefully short of this overall kitty and bids hovered at the reserve price, DoT said, and analysts concurred, that auction outcome and response had surpassed initial expectations.

Reliance Jio Infocomm has acquired the right to use spectrum in all 22 circles or zones across India, in the auctions. Jio has bagged spectrum in bands such as 800 MHz, 1800 MHz and 2300 MHz, and its spectrum footprint is up by 55 per cent to 1,717 MHz.

According to DoT data, Vodafone Idea Ltd (VIL) has bought 5.8 MHz spectrum in 900-band and 6 MHz in the 1800-band. VIL acquired spectrum in 900 band for ₹1274 crore and in 1800 band for ₹719 crore.

Jio, in the 800 MHz band, has acquired spectrum for ₹34,491 crore; in 1800 MHz, for ₹12,461 crore; and in 2300 MHz, for ₹10,170 crore. Bharti Airtel has paid maximum for 900 MHz band ( ₹6,448 crore), 1800 MHz ( ₹5,816 crore), 800 MHz ( ₹3,008 crore), 2300 MHz ( ₹3,070 crore), 2100 MHz ( ₹355 crore), DoT had said last week.

Airwaves come in different bands which support different propagation characteristics for transmission of voice and data. For instance, lower bands like 800 MHz and 900 MHz support a good indoor coverage while higher bands like 2300 MHz have a good carrying capacity.

The airwaves are also sold in quantities measured as MHz. The auctions allows companies to use government-owned airwaves for carrying signals for data and voice, for a particular period of time.

Spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500MHz bands were up for bidding, although airwaves in two bands -- the premium 700 MHz and 2500 MHz bands -- went unsold in the auctions.