Spectrum auction: Upfront payments likely in FY16

With the spectrum auction entering the 17th day, the government may not get all of the upfront Rs 25,000 crore (Rs 250 billion) revenue from the sale it was expecting this fiscal.

The auction has so far got bids worth Rs 1.07 lakh crore, of which one-fourth is to be paid within 10 days of close of sale. But with the auction entering the 17th day on Monday, the cut of date for this payment will push into April.

If the auction could have ended on Saturday, the government would have got over Rs 25,000 crore as the upfront payment by March 31. But the auction will continue on Monday, which means even if it ends that day, operators can deposit the upfront amount by April 2.

At the end of 16 days of auction, the amount of bids stood at Rs 1.07 lakh crore with provisional allocation of 88 per cent airwaves.

This, however, does not mean that government will not get any upfront payment. Sources in the Department of Telecom said that 10 days is the maximum limit and operators can deposit the amount earlier also.

Sources said the operators who are bidding must have put in place a mechanism to fund their auction payouts and they can deposit the amount in few days of close of auction.

As per auction document, in case of deferred payment option, telecom operators are required to pay an upfront payment of 33 per cent in case of 2100 MHz, 1800 Mhz bands and 25 per cent for 900 MHz and 800 MHz bands within 10 calendar days of the close of auction.

The sources added that Finance Ministry has also enquired about the status of auction on Saturday.

The government is committed to restricting the fiscal deficit at 4.1 per cent of the GDP during the current fiscal, the lowest level in seven years, and has taken several steps towards it.

It had put in place a fiscal consolidation roadmap as per which the fiscal deficit has to be brought down to 3 per cent of the GDP by 2016-17. To reduce the fiscal deficit to seven-year low, it has also announced a slew of austerity measures aimed at cutting non-plan spending by 10 per cent.

Sources said about 5-6 circles witnessed activity with aggressive bidding in three circles of premium 900 Mhz band.