Telecom Commission allows telcos to pay for spectrum in 16 yrs

Telecom Commission, the apex decision-making body at the telecom department, today approved extension of time-period for the payment of spectrum bought in auctions by telcos to 16 years from the current 10 years.

Deferred payment option for spectrum was one of the key demands of telecom operators that they submitted before the inter-ministerial group (IMG) -- tasked with finding a remedy to the financial difficulties of the telecom sector -- to provide relief to the sector reeling under debt of Rs 4.6 lakh crore.

Under the present system, telecom operators are required to make partial upfront payment and rest of the payments in 10 annual instalments after a moratorium period of two years.

The commission also approved recommendation of the IMG to lower interest rate charged over penalties imposed on service providers with slight modification, a government source said.

"Telecom Commission has approved IMG recommendation to extend spectrum payment period to 16 years from 10 years at present. It has also approved lowering of interest rate on penalties imposed on telecom operator. It will be now charged on the basis of MCLR plus 400 basis points instead of prime lending rate," the source said.

Debt raised on SBI prime lending rate basis are charged interest of 13.7 per cent. Under the new rule, if approved by the Cabinet, telecom operators will need to pay 12 per cent interest on penalties and delayed payments.

"This is a welcome step of the government. It does give some relief to telecom operators. While the net payment value will remain same, they are getting more time to pay for spectrum. However, it does not address systemic financial stress of the sector which comes from levies to the tune of 29-32 per cent, high spectrum usage charge, licence fee etc," Industry body COAI Director General Rajan S Mathews told

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