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Reliance Jio makes good on spectrum dues as it gears up for 5G auctions: Report

Unlike its competitors, the Indian telco hasn’t availed the government’s relief measures and has opted to pre-pay instead.

India’s largest telecom operator, Reliance Jio, has coughed up Rs. 30,791 crores to the Department of Telecommunications (DoT) towards dues on spectrum purchased before March 2021, according to a report in Business Standard. The company was supposed to settle these liabilities in annual instalments from financial year 2022-23 to FY35, the report added.

The total sum concerns interest accrued on spectrum purchased between 2014-2016 as well as spectrum acquired through a right-to-use agreement with Bharti Airtel in 2021. The dues would have carried an interest of nearly 10 per cent, but Jio will now be able to save Rs. 1,200 crores on interest payments every year, the report said.

The news comes at a time when telecom operators are in a precarious financial position owing to which they are not able to service their payment obligations. Reliance Jio’s decision to clear its dues as others opt for a moratorium may aid the company in raising funds for the 5G auctions.

Jio’s pending dues

The company still has to clear spectrum dues when it acquired spectrum in the 800 MHz, 1800 MHz, and 2300 MHz bands for a total of Rs 57,123 crore last year. The company has an outstanding Rs. 37,184 crore after shelling out Rs 19,939 crore upfront, the report revealed.

“Reliance Jio Infocomm (RJIL) had executed the first tranche of prepayment in October 2021 pertaining to spectrum acquired in auction in the year 2016,” the company said.

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What about Jio’s competitors?

Bharti Airtel paid Rs. 15,519 crores to the DoT in December 2021 which concerns deferred liabilities arising from the acquisition of spectrum in 2014, the company said in a press release.

The company had acquired 128.4 MHz spectrum (including Telenor spectrum) for a consideration of INR 19,051 crores in the 2014 auction. It estimates that the prepayment will likely result in interest cost savings of at least Rs. 3,400 crores, the release revealed. Bharti Airtel has secured a moratorium on AGR and spectrum dues as it owes Rs. 25,000 crores in AGR dues and Rs 75,000 crore for spectrum bought since 2012, The Hindu BusinessLine reported.

Vodafone-Idea, on the other hand, approved the conversion of the full amount of interest arising out of the company’s spectrum auction installments and AGR (Adjusted Gross Revenue) dues into equity. It turned the Indian government into a majority stakeholder with 35.8 percent in India’s third-largest telecom company.

The government said that it has no intentions to meddle in the management of the company and will exit the business once it stabilises its financial position. The DoT came out with a relief package which offered telcos the option of a four-year moratorium on spectrum and AGR dues to support the distressed sector. Airtel and Jio availed the measures provided by the government and opted for the prepayments of their spectrum dues, respectively.

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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