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DoT submits details of spectrum sharing, trading of telcos to SC

If the apex court directs the telcos using spectrum of bankrupt companies to pay the past dues, then both Airtel and rival Reliance Jio Infocomm Ltd will be hit hard. (Photo: Pradeep Gaur/Mint)Premium
If the apex court directs the telcos using spectrum of bankrupt companies to pay the past dues, then both Airtel and rival Reliance Jio Infocomm Ltd will be hit hard. (Photo: Pradeep Gaur/Mint)

  • In the case of spectrum sharing, the right to use spectrum as granted by DoT remains with the respective TSPs, whereas in the case of spectrum trading, the right to use gets transferred from the buyer to the seller

NEW DELHI/ MUMBAI: The Department of Telecommunications (DoT) on Monday filed an affidavit in the Supreme Court saying AGR dues have to be calculated based on "spectrum sharing" and "spectrum trading" agreements signed between the two telecom service providers. The case will be heard later today.

The affidavit has been filed in compliance of a 14 August order, wherein the court had asked "The Department of Telecommunications (DoT) to make it clear in whose name and from which date the spectrum is being used and how much fees/dues of AGR year-wise and amount deposited with it for using of the same by the respective companies under some inter se arrangements of the companies and the dates thereof."

On Friday, a three-judge bench, headed by justice Arun Mishra, had said spectrum trading guidelines mandate clearance of dues before the transfer of the radio airwaves to a buyer under the Insolvency and Bankruptcy Code (IBC). If the bankrupt company that holds the spectrum does not pay the said dues, its user clears the dues, the court said.

DoT has explained how the AGR dues between the two telecom service providers (TSPs) will vary depending on the sharing of the spectrum. In case of sharing, when the spectrum does not change hands, the TSPs will continue to make payment of AGR dues arising for the airwaves that each hold.

However, due to the additional spectrum the TSPs get to use, the AGR-based dues (spectrum usage charges) are assessed at a higher rate for each of the TSPs. There is an addition/increase by 0.5% in the SUC rate, applied separately on both TSPs. Thus, if SUC rate of each TSP prior to sharing was 3%, then this will increase to 3.5% for both of them.

The use of each other's spectrum by means of sharing should normally lead to increase in AGR dues for both TSPs. This would lead to increased licensed fee and SUC to the Government as these are based on share of AGR. TSPs who share spectrum, continue to pay and are duty bound to pay, their AGR based dues arising from the use of spectrum.

Spectrum trading allows parties to transfer their spectrum rights and obligations to another party. In the case of spectrum sharing, the right to use spectrum as granted by the DoT remains with the respective TSPs, whereas in the case of spectrum trading, the right to use gets transferred from the buyer to the seller.

Videocon has sold its spectrum in the 1800 megahertz band to Airtel, which itself owes 43,980 crore in AGR dues. Airtel had also bought the airwaves held by another bankrupt telco Aircel Group. While Aircel owes 12,289 crore in AGR dues, Videocon has a liability of 1,376 crore. If the apex court directs the telcos using spectrum of bankrupt companies to pay the past dues, then both Airtel and rival Reliance Jio Infocomm Ltd will be hit hard.

Reliance Jio has been using bankrupt Reliance Communications Ltd’s (RCom) spectrum under a sharing agreement since 2016, the launch year of India’s largest mobile operator. RCom owes 25,199 crore, including spectrum usage charges and licence fees. This is nearly half of 49,054 crore in dues calculated under the company’s insolvency proceedings.

In its 962-page of affidavit, the DoT has also provided details of the spectrum trading between Reliance Communications Limited (seller) and Reliance Jio Infocomm Limited, Videocon Telecommunications Limited (seller) and Bharti Airtel Limited (buyer), Aircel Limited/Dishnet Wireless Limited (seller) and Bharti Airtel Limited (buyer), TIKONA Digital Networks Ltd (seller) and Bharti Hexacom (buyer).

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