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Entry-fee adjustment for telcos only on immediate full payment

Sounak Mitra & Surajeet Das Gupta/New Delhi 01 Dec 12 | 12:42 AM

The department of telecommunications (DoT) will allow adjustment of the entry fee paid by telecom companies whose licences were cancelled by the Supreme Court’s February order but only if they pay the entire amount for the spectrum they won in the recent re-auction and not take the deferred payment scheme. The successful telcos have to make the payment by tomorrow.

The move will impact the plan of Videocon Telecommunications, one of the five succesful bidders in the recently concluded auction in the 1,800 MHz band, which wants to go for deferred payment. The company had lost its pan-India licence as a result of the Supreme Court order and has now won spectrum in six circles, for Rs 2,221 crore.

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It had written to the government in the third week of November, asking for adjustment of the 33 per cent of the successful bid amount (as permitted under the deferred payment scheme) with the set-off amount of the entry fee it had paid for the cancelled licences. If this was allowed, Videocon would not have had to pay any money for the auctioned spectrum in the next seven years.

The government had given an option to the winning bidders - pay all the amount in one go or under a deferred scheme. In the latter, the operators had to pay 33 per cent upfront, then got a two-year moratorium and then pay the balance in 10 equal instalments but at a yearly interest of 9.75 per cent.

DoT has said Idea Cellular, which has won spectrum in seven circles in the auction of the 1,800 MHz spectrum band for Rs 2,030 crore, has opted for full adjustment of the entire entry fee towards the upfront payment.

The government had managed to close the auction with just Rs 9,407 crore, due to the lukewarm response in the last auction.

Telenor has won spectrum in six circles for Rs 4,018 crore and Vodafone would need to pay Rs 1,128 crore for spectrum. Airtel won only one circle (Assam), for Rs 8.7 crore.

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