The telecom industry has sought another relief package from the government to enable them to roll out affordable 5G services. Reliance Jio, Bharti Airtel, and Vodafone Idea have asked for at least a 5-6 years of moratorium on the payments in the upcoming 5G auction. Other demands include zero upfront payment and allowing operators to pay the bid amount over 25 years.

“In the current financial stressed situation when Government had to step in through telecom reforms, the payment terms for upcoming 5G spectrum auction have to be such that the financial stress is neither aggravated nor it nullifies the liquidity support provided by the Government through reform package,” Vodafone Idea said in a communication to the telecom regulator which is currently discussing the policy framework for 5G services.

Bailout package

In September 2021, the telecom sector was given a bailout package in a bid to alleviate the financial stress in the sector. However, the measures announced then will provide only a temporary respite to debt-laden telecom operators by pushing back regulatory payouts for four years. Operators such as Vodafone Idea are struggling to stay afloat and would find it difficult to participate in the upcoming 5G services roll out without additional Government support. 

Reliance Jio and Voda Idea also want interest charged on the spectrum payment installments to be on the RBI repo rate, which is 4 per cent; while Bharti Airtel doesn’t want the government to charge any interest at all. 

“The deferred payment scheme should be treated as a financing scheme for building vital national infrastructure and not as a monetization option……Therefore, we submit that there should be 10 per cent upfront payment requirement to ensure TSP’s commitment, followed by a 5-year moratorium in payments. The remaining part of the payment should be spread over the remaining 25 years of spectrum validity” Reliance said. 

Bharti also wants to recover on spectrum payments, in the next 24 years after the 6-year moratorium on 5G spectrum payments which they have sought.

State-run telecom operator Bharat Sanchar Nigam Limited (BSNL) also requested the Telecom Regulatory Authority of India for a 3-year moratorium on future 5G spectrum payments, stating that it will clear its dues in ten installments on annual basis. 

5G spectrum auctions are likely to happen sometime in July of 2022, will require huge investments from the financially ailing telcos. Both Bharti Airtel and Vodafone Idea have already taken upon the government’s September 2021 offer on a 4-year moratorium on their pending spectrum and AGR dues. On January 11, Voda Idea also opted to convert its spectrum and AGR debt to the government into equity, which means in 4 years time, the government of India will own a nearly 36 per cent stake in India’s third-largest telco. However, despite the government’s attempts to infuse liquidity into the cash-strapped industry, money for future investments such as 5G continues to be scarce. Thus telcos are also seeking a nearly 90 per cent cut on prices on which 5G spectrum is going to be auctioned.

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