Telenor urges DoT to go for deferred spectrum payment

Telecom operator Telenor has asked the Department of Telecommunications (DoT) to retain the option of deferred payment suggested by the Telecom Regulatory Authority of India (Trai), saying it would help reduce the burden on the industry.

''The 'pay as you earn' payment terms is a win-win situation both for the industry and the government,'' the operator, an arm of Norway-based Telenor, said in a letter to DoT.

The communication comes days after Telenor's top management expressed concerns over 'high-priced' spectrum in India and indicated an exit from the country if it fails to procure frequencies at reasonable price either through auction or the trading route (Spectrum auction likely in July; base price 'too high').

''On the one hand the payment burden on the TSPs (telecom service providers) is eased in the initial years and the resources will be utilised in roll-out of the networks, on the other hand there will be no loss to the exchequer,'' Telenor India chief executive Sharad Mehrotra said in the letter.

The letter addressed to telecom secretary J S Deepak said that a liberal payment policy can potentially make the frequency band below 1000 Mhz like 900 Mhz band and 700 Mhz band attractive to a lot of telecom companies.

 Trai has suggested that government should charge only 10 per cent of bids received for spectrum and balance payment should be made over period of 18 years in equal instalments with interest.

''We earnestly urge the Telecom Commission to accept Trai's recommendation of liberal payment terms and notify for the forthcoming auction,'' Mehrotra said. Trai has suggested a mega-spectrum auction plan that has potential to fetch government Rs5.36 lakh crore. This recommended reserve price for the spectrum auction is almost double the cost of all spectrum investment to date in India and more than double the total gross revenues of Rs2.54 lakh crore posted by all telecom service providers in the 2014-15 financial year.

Telenor chief financial officer Morten Karlsen Sorby has called current spectrum prices in the market 'absurd'. The company, which accounts for about 6,000 direct and indirect jobs in the country, has already made impairment provision in its financial books for Telenor India.

After impairment of network equipment (Rs1,092 crore) and spectrum (about Rs700 crore), Telenor expects recoverable amount of its assets in India to be around Rs3,500 crore (NOK 4.5 billion). As per GSMA, the Trai-recommended base price equates to more than 20 times the annual free cash flow of the entire mobile industry in India.