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HomeEconomyHow deferring spectrum fees will help ailing Vodafone Idea, Airtel

How deferring spectrum fees will help ailing Vodafone Idea, Airtel

The relief on fees comes after Vodafone Idea posted the worst quarterly loss in India’s corporate history & Bharti Airtel logged record deficit in Q2.

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New Delhi: India will defer spectrum payments due from telecommunications companies for two years to help an industry ravaged by a years-long price war, mounting debt and a court decision last month demanding $13 billion in overdue fees.

The moratorium will be for two years beginning April 2020, Finance Minister Nirmala Sitharaman told reporters after a cabinet meeting in New Delhi on Wednesday. Interest as stipulated in airwave auctions will continue to be paid, she said.

The proposal was recommended by a panel of senior Indian bureaucrats under Prime Minister Narendra Modi to help wireless carriers the government estimates owe more than $20 billion in license fees and spectrum charges. The relief will be worth as much as 450 billion rupees ($6.3 billion) and the panel will continue to discuss other measures to help the industry, an official told reporters.

Modi intends to help preserve the survivors in a telecommunications industry that has shrunk from a dozen wireless operators a couple of years back to just three private-sector firms. Carriers that had flocked to India’s fast-growing market were led to merge or quit the business after Reliance Jio Infocomm Ltd., led by billionaire Mukesh Ambani, spurred an intense price war at its launch in 2016.

The relief on fees comes after Vodafone Idea Ltd. posted the worst quarterly loss in India’s corporate history earlier this month and Bharti Airtel Ltd. logged a record deficit for the September quarter. Jio, which overtook both companies and became the top carrier by subscribers this year, had argued against government action to help Vodafone Group Plc’s Indian venture and Bharti, which is backed by billionaire Sunil Mittal and Singapore Telecommunications Ltd.

Expectations for government help and plans by carriers to raise prices sparked a rally in shares of Vodafone Idea, which more than doubled in price over the past four trading days in Mumbai. Bharti also climbed, while Jio parent Reliance Industries Ltd. jumped to a record.

The two-year moratorium follows requests by both companies for relief after the Supreme Court of India ordered the nation’s carriers to pay about $13 billion combined, mostly license and spectrum fees. The ruling was over a years-long dispute about how the fees should be calculated, leaving the amounts due to accumulate over the years. The court decision left Vodafone Idea owing about $4 billion and Bharti about $3 billion, while Jio was stuck with a bill of only $130 million, given it started in 2016. -Bloomberg

Also read: Vodafone Idea, Airtel sending out distress signals. But they are only paying for their sins


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  1. Indian telecom is in doldrums thanks to SC, Govt taxes and everchanging policies and high license fees. With our PM advertising Jio and BSNL returning its 4G spectrum back to Govt it is appearing we will hace a telecom monopoly with Jio. Sad thing is that people wish to work for Vodafone idea or Airtel but not bania Jio. BSNL and MTNL being killed by govt with people taking VRS. What a shame of telecom done by jio and govt?Only sufferers are people who will loose jobs and people who will pay high charges in the monopolostic market.

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