Lockdown-led information utilization a lifeline for telcos; spectrum sale on DoT radar

For the Indian telecom sector, the horoscope for 2020 was written almost two months earlier than the 12 months had even begun. On October 24, 2019, the Supreme Court delivered a judgment that gave finality to a greater than two-decade-old authorized tussle — the adjusted gross income (AGR) problem. In its judgment, a three-judge Bench of the apex courtroom dominated that the DoT’s definition and calculation of AGR was appropriate, and, due to this fact, the telcos in addition to others who held spectrum licences must pay pending dues, penalty for not having paid their dues, and the curiosity on penalty. The SC, had then, famous the mentioned dues must be paid inside the subsequent three months.
This 12 months, nonetheless, the Department of Telecommunications (DoT) can be banking on promoting spectrum to boost cash, with the hope that telecom corporations will evince curiosity as they want spectrum to develop companies.
The direct impression of the SC judgment was on two main non-public telcos, Bharti Airtel and Vi (then Vodafone Idea). Having weathered the low worth onslaught introduced by Reliance Jio during the last 4 years, each Bharti Airtel and Vi had nearly began getting again on monitor when the AGR judgment derailed their wagons once more. The two corporations had been saddled with dues in extra of Rs 43,000 crore and
Rs 58,000 crore, respectively. In complete, the dues had been in extra of Rs 1.47 lakh crore. Most consultants, Cellular Operators Association of India, and even the companies mentioned this was almost certainly finish of the road for them.
The scenario was much more dire for Vi. The management of the corporate, together with chairman Kumar Mangalam Birla made an unprecedented assertion that if the federal government didn’t present aid on fee of previous AGR dues, Vi must “shut shop”.
In a uncommon courageous affront on a courtroom of legislation’s judgment, Bharti Airtel and Vi determined to not deposit any cash, and let the deadline of January 23 lapse. The bravado had some backing with a final minute DoT order that mentioned there can be no coercive motion towards the telcos, even when they didn’t pay any dues by the deadline. These actions, nonetheless, didn’t sit effectively with the SC. In a listening to on the difficulty on February 14, 2020, the three-judge Bench got here down closely on the businesses, the DoT and all different events, threatening everybody with contempt of courtroom for not having deposited any monies.

By the night of February 14, most telecom corporations that owed any AGR to the DoT mentioned they might pay a part of their dues in per week’s time. And, so that they did. On a listening to on the difficulty on March 17, there was some aid when the highest courtroom sought a fee schedule from the DoT in addition to the businesses. Meanwhile, Covid entered India. Within days, it threw financial actions out of substances. While manufacturing, companies and different indicators of the economic system took a beating, telecom raced forward.
Data consumption skyrocketed, with Vi claiming that within the first three months of the lockdown, the corporate had seen extra information consumption than it had seen during the last three years. The name volumes of all telcos was additionally northbound. Together, the three telcos and their dormant community capacities held fort as all the pieces moved on-line.
More encouraging information was on the best way for Bharti Airtel and Vi. In September, each corporations received another likelihood to battle within the ring, after fervent requests from the DoT, and the companies moved SC. In an order, the SC allowed them to pay their AGR dues in a staggered annual installment over the following 10 years beginning April 1, 2021. Bharti Airtel, which has paid near Rs 18,000 crore of the roughly Rs 43,000 crore that it owes has claimed a moratorium of a number of years from AGR funds. On the opposite hand, Vi, which mentioned it has paid almost Rs 6,900 crore, claimed the identical, though for a smaller interval.
For 2021, DoT’s greatest hope can be promoting spectrum. It has placed on supply the sale of 2251.25 MHz of spectrum throughout seven frequency bands at a reserve worth of Rs 3.92 lakh crore. Along with the value, nonetheless, the full spectrum on supply has additionally been lowered by greater than a 3rd. The DoT has pinned hopes on making good cash from the public sale, citing that the telcos would wish to purchase spectrum within the 4G band to develop their companies.
The final auctions, held in 2016, the place the federal government provided 2,354.55 MHz at a reserve worth of Rs 5.60 lakh crore, however managed to promote solely 965 MHz, or about 40 per cent of the spectrum, and mop up solely Rs 65,789 crore, could be taken as a story of warning. Despite all forecasts, whether or not or not it will likely be an excellent pay day for the DoT can solely be ascertained in March when auctions are held. Until then, the telecom sector holds on and survives to battle one other day.