By fixing a low income receipt target of Rs 53,987 crore from telecommunication services for FY22, the government has signalled it does not strategy to hold auctions for 5G spectrum in the 3.5 GHz band in the next fiscal.
The government plans to hold auctions for 4G spectrum in March, the proceeds of which would be accounted for in the next fiscal. This auction is for 4G bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2,300 MHz and 2,500 MHz.
The 4G spectrum auctions have been announced by the government late final year, but analysts have been expecting that sometime through the latter half of the next fiscal, the government may perhaps also hold auctions for the 5G band in 3.5 GHz, but now it appears unlikely.
The quantum of spectrum becoming place up for auctions in March is worth Rs 3.92 lakh crore at reserve price tag, which the business sees as as well higher. Therefore, participation is anticipated to be restricted to renewing the airwaves which are expiring later this year. Looking at the spending budget target, it appears the government has accepted this and is searching to garner only about Rs 60,000-70,000 crore from the auctions. Since operators have the choice of paying 25% of the total quantity bid for spectrum under 1 GHz – like 800 MHz and 900 MHz – and 50% of the total quantity bid for spectrum above 1 GHz – like 2,300 MHz or 2,500 MHz – with more spectrum becoming place up for auctions above 1 GHz, the government would be in a position to get about Rs 30,000-35,000 crore as upfront payment. Add to this about Rs 20,000 crore which it gets each and every year as income sharing licence charge and spectrum usage charge, the targeted quantity of Rs 53,986.72 crore appears achievable.
The realistic assessment of telecom receipts for FY22 comes following the overambitious budgetary target fixed for the present fiscal at Rs 1.33 lakh crore. Either, the government had hoped that the huge adjusted gross income (AGR) dues of the operators (which they have been necessary to spend as per the Supreme Court order in October 2019) would come in one go or it anticipated to conduct auctions in the present fiscal from which it may perhaps have anticipated as well higher a sum.
The revised estimate from telecom receipts for the present fiscal has been sharply brought down to Rs 33,737 crore.
In the final 7-8 years, the government has been in a position to realize the spending budget estimate from telecom receipts only twice.