The Cabinet on Thursday approved a staggered refund of around Rs11,258 crore to state-backed loss-making telecom companies (telcos) BSNL and MTNL which sought to return the 4G radio spectrum in the 2.5 GHz band that they had received in 2010.
All these years, the telcos were not able to roll out 4G services in spite of having the necessary spectrum. In 2010, BSNL paid Rs8,314 crore and MTNL Rs4,534 crore for the spectrum.
Last fiscal, the two telcos reported a collective loss of Rs39,314 crore (BSNL Rs24,681 crore and MTNL Rs14,633 crore).
Now, they could use part of the refund to pare their burgeoning debt, while the rest would probably be used to strengthen their 2G and 3G business.
M F Farooqui, secretary of the Department of Telecommunications (DoT) said, the government will auction the spectrum to be surrendered by MTNL and BSNL. “We’ve not decided in which auction it will reflect though.”
PwC’s telecom analyst Mohammed Chowdhury said, “The government is most likely to offer MTNL and BSNL’s spectrum in the 700 MHz auction, since the spectrum for the February 3 auction has already been finalised. However, given the recent approval for telcos to roll out 4G with any spectrum they already have, there may be limited interest in MTNL and BSNL’s 4G spectrum, given that the 4G ecosystem in India is at a nascent stage. And 4G spectrum is expensive.”
Another analyst agreed that the two telcos’ 4G spectrum may not find many takers. “But this won’t amount to a loss to the government as the refund is just from one state department to another, which may not involve financial transactions per se.”
On Wednesday, DoT sources said the 700 MHz auction may be delayed by two years.
Informed sources said Reliance Jio, the 4G arm of Reliance Industries, may also look at surrendering a part of its pan-India 700 MHz spectrum, having forged a partnership with Airtel to use the latter’s spectrum for its 4G roll-out.