Early Spectrum Payments Help Govt Reach Telecom Revenue Target

Over the last few weeks, both Reliance Jio and Bharti Airtel have done significant spectrum payments. While the two of them cleared old dues, these early payments have also helped government reach its telecom revenue target for the fiscal. Incidentally, both of the telcos have collectively paid over Rs. 263.11 billion to the government.

Government hits Telecom Revenue Goals After Spectrum Payments from Jio, Airtel

The spectrum payments started with Reliance Jio, which, in October, paid Rs. 107.92 billion to the DoT. The telco cleared its dues from the 2016 spectrum auction. In the 2016 spectrum auction, Reliance Jio had bought a spectrum worth Rs. 136.72 billion. Back then, it had paid Rs. 59.30 billion as an upfront payment.

Fast forward to December, and Bharti Airtel became the second telco to pay DoT its deferred spectrum liability. Bharti Airtel said that it has paid Rs. 155.19 billion to the DoT towards prepayment of the entire deferred spectrum liabilities from 2014.

Notably, in 2014, during the 3G spectrum auction, the telco had acquired 128.4 MHz spectra worth Rs. 190.51 billion. As the DoT’s spectrum repayment norms define, it had annual installments from FY 2026-27 to 2031-32, with an interest rate of 10%. Therefore, the telco had to pay the highest interest rate amongst the deferred liabilities and borrowings. Furthermore, this would have meant a lot of extra expense for the telco. That has been the motivation behind paying the spectrum liability off before the installments scheme kicked in.

Notably, the government had set the telecom revenue target for 2021-22 at Rs. 539.8672 billion. However, with these payments, amounting to Rs. 263.11 billion, the government might just hit the target; this will happen when the SUC and annual license fees are taken into account, amounting to roughly Rs. 250 billion.

Over the last few years, the government has failed to really achieve targets. For instance, last year, the government has set a target of Rs. 1.33 trillion; a very optimistic target. However, the telecom department quickly dropped that to a more reasonable Rs. 337.37 billion. Even though the most recent spectrum payments should count towards a one-time gain, for the current fiscal, the government has all but hit the target.