Planned FY24 spectrum sale round drives non-tax revenue goal from telecom

Officials said deferred spectrum charges to be paid by telcos also make up a large chunk of the expected revenues

telecom, trai, mobile, data, internet, smarphone, tech, 4g, 5g, tower, spectrum auction
Subhayan Chakraborty New Delhi
3 min read Last Updated : Feb 03 2023 | 11:45 PM IST
Another round of spectrum auction planned for late FY24, along with higher incidence of deferred spectrum charges, has led to a 30 per cent higher estimate of non-tax revenue from telecom in FY24.

Under the telecom head, the latest Budget has listed out non-tax revenue collection estimates of Rs 89,469 crore in FY24. This is up an annual 30 per cent from the revised estimates of Rs 68,784 crore in FY23, and 69.4 per cent higher than the budget estimates of Rs 52,806 crore in FY22.

Even though Finance Minister Nirmala Sitharaman did not make any announcements about holding a spectrum auction in 2024, officials told Business Standard that the government is sticking to its stated policy position of having small rounds of spectrum auctions annually.

"The telecom reforms had stressed on the need to hold periodic auctions. There, another round of spectrum auctions will be held in the late part of the next financial year (FY24). That will contribute a substantial addition to the non-tax revenue target," an official said. The Telecom Ministry had also communicated the same to the Finance Ministry, he added.

In the last round of auctions ending on August 1, 2022, the government had put up 72,098 MHz of 5G spectrum capable of offering ultra-high speed mobile internet connectivity. Of this, 51,236 MHz or 71 per cent of the total was sold with the total bid amounting to Rs 1,50,173 crore.

The total earnings from the 5G spectrum is almost twice the Rs 77,815 crore worth of 4G airwaves sold in 2021, and thrice the Rs 50,968.37 crore the government received from 3G spectrum auctions in 2010.


Deferred payment & licenses

Due to changes in payment plans for spectrum, the government now receives less.  At the last 5G auctions, while Bharti Airtel went for the option to pay a higher upfront amount, the other three companies--Reliance Jio, Vodafone Idea and first time bidder Adani Data Networks--had opted for 20 equal annual instalments.

Officials said a larger proportion of deferred payments will be received by the government in FY24.

Apart from auctions, receipts under telecommunication services usually relate to the license fees from telecom operators and receipts on account of spectrum usage charges (SUC).

The government also earns non-tax revenue from the sector in the form of license fees, calculated at 8 percent of the adjusted gross revenue (AGR). Of this, 5 percent is set aside as a contribution to the Universal Service Obligation Fund.

A flat 3 percent spectrum usage charge is also levied on telecom companies for spectrum acquired before September 15, 2021.

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Topics :Spectrum AuctionTelecom industrynon tax revenue

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