Spectrum 5G: Trai to review auction payment terms

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Trai will also decide whether operators have to pay an upfront amount – part of the total bid amount – or the same would be waived this time.

The Telecom Regulatory Authority of India (Trai) will decide whether operators will get a four-year or longer moratorium after an upfront payment for new spectrum they acquire in the 5G auction to be held later this year, or the two-year moratorium – which has been the past practice – would continue. Trai will also decide whether operators have to pay an upfront amount – part of the total bid amount – or the same would be waived this time. The government will follow its recommendations, sources said.

Another issue to be considered this time by Trai is the duration of the payment of spectrum rights through deferred payments. Sources said all of these issues needed to be addressed because in September last year the government announced a stimulus package for telecom operators in which they included a four-year moratorium on payment of user fees of the spectrum. In the past, after each auction, operators were required to pay a certain portion of the bid amount depending on the frequency bands and pay the rest over 16 years in equal installments.

The initial payment was in the range of 25%, 33% and 50% of the bid amount depending on the bands. In 2019, the government had provided for a two-year moratorium on these payments. Thus, the operators obtained a moratorium of six years in total with the net present value intact. Officials said that since the telecommunications relief package was provided to operators to overcome their financial crisis and be able to invest in the network, it makes sense to extend this relief to any spectrum acquired by them in the 2022 auction. for 5G spectrum.

However, since Trai will be working on the reserve price for the auction, he will also be looking at all of these related issues. For their part, the operators have asked for a 5 to 6 year moratorium on new spectrum purchased at auction and a 20 to 24 year moratorium after that to pay the full amount in installments.

For example, Bharti Airtel and Vodafone Idea suggested no upfront payment with a six-year moratorium, while Reliance Jio offered a 10% upfront payment followed by a five-year moratorium. Vodafone Idea suggested 20 annual installments after the moratorium period, while Jio demanded 25 installments. Bharti Airtel requested 24 installments after the moratorium.

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