Govt may lower upfront payment on spectrum bid amount for 5G

The government fixing a very modest revenue target of Rs 52,806.36 crore in FY23 from the telecom receipts despite stating that 5G auctions will be held during the year, signals that it will ask for a very nominal upfront payment from the operators on the bid amount.

Just for perspective: the Budget estimate from telecom receipts for FY22 without factoring in auctions was Rs 53,986.72 crore. The revised estimate shows that government will far exceed the target at Rs 71,959.24 crore. This is largely due to the prepayment of spectrum dues by Reliance Jio and Bharti Airtel.

If one goes by Crisil estimate, the top two telecom operators will shell out around Rs 1 lakh crore in the upcoming 5G auctions. The rating agency has estimated that an upfront payment of 25% of this would net the government Rs 25,000 crore in FY23. The government would get around Rs 25,000-30,000 crore by way of licence fee and spectrum usage charge.

Though a decision by the government on final upfront payment would be taken only once the Telecom Regulatory Authority of India submits its recommendations, the industry is hopeful it would be lower than 25%.

The hope is on the premise that so far, the norm has been to ask operators to pay 25% or 50%, depending on the spectrum bands, of the bid amount as upfront payment, but since the operators are facing financial hardship and the government has given them relief by way of a moratorium on the spectrum and AGR dues, it would either ask them not to pay any upfront amount or keep it as low as 10%.