Here’s why Bharti Airtel still has to wait for bits of spectrum despite paying Rs 157.38 crore ahead of time

Here’s why Bharti Airtel still has to wait for bits of spectrum despite paying Rs 157.38 crore ahead of time

Airtel despite paying Rs 157.38 crores in advance for getting unsold immediately available spectrum blocks will end up having to wait to get hands on other spectrum blocks due to delayed availability.

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On Friday, the Department of Telecommunications (DoT) in a release confirmed the allotment of frequencies to successful bidders for immediately available spectrum blocks along with harmonization of frequencies. The release further mentioned that DoT had received Rs 157.38 crores from Bharti Airtel for immediate allotment of available unsold spectrum blocks in place of provisionally allotted spectrum blocks available from a later date.

The Government got Rs 157.38 crores immediately from Bharti Airtel instead of receiving it later in August/September 2021. While the announcement might have sent good vibes among Airtel customers due to spectrum being allocated straight away that will eventually improve networks Bharti Airtel still has to wait to get its entire hands upon the spectrum blocks acquired through Spectrum Auction 2021.

As of this evening, DoT hasn’t published the finer details of the change in frequency allotment and probably may not end up doing so. However, the microscopic data from earlier DoT releases including Demand Note, Provisional Frequency Assignment, and Amended Annexure F make it clear that allocation of entire frequencies acquired through Spectrum Auction 2021 will remain stretched till early October 2021.

First, let us take at a look at the payable amount to DoT for the spectrum acquired along with the payment made by TSPs till date as per DoT for the same followed by the unsold spectrum block availability in LSAs and bands wherein there is a delay in allocation of frequencies.

Payable Amount and Payment Received by DoT

Payable Amount - Bharti Airtel Spectrum Auction 2021

The most important part after successfully bidding for spectrum blocks is to deposit the payable amount in time. Given the availability of deferred payment options, the trio of private operators opted for the same. The trio had to shell out Rs 21918.47 crores by 18th March 2021 as per DoT’s demand note as upfront payment for immediately available spectrum blocks. DoT’s press release on Friday confirmed the exact amount being received by 18th March 2021 from the trio operators.

The next part involves the frequencies available from a later date due to delay in expiring of existing assignments. The terms and conditions in the NIA notes that in such cases the required 25%/50% upfront payment payable at the time of auction completion shall be 10% of the bid amount for sub-1 GHz bands and 20% of the bid amount for other bands with balance component of upfront payment to be made one month prior to the assignment of frequency.

Bharti Airtel’s deferred upfront payment for frequencies available at a later date amounts to Rs 663.56 crores whereas it has currently paid-up Rs 157.38 crores out of the same for immediate allocation of spectrum.

The difference in upfront payable amount and the payment received by DoT immediately rather than in August/September 2021 clearly hints that certain payment for allocation of spectrum will be done later this year.

Next, we take a look at the frequencies available at a later date based on provisional assignment and availability of unsold spectrum blocks in various bands and LSAs to understand what’s at play here.

Availability of Unsold Spectrum Blocks

900 MHz Band – Bharti Airtel

In the 900 MHz Band, Bharti Airtel is affected by delayed availability of frequencies in Gujarat and North East only. 1.2 MHz spectrum each in Gujarat and North East is available from 1st September 2021 for allocation.

In Gujarat, Airtel picked up the 4.2 MHz put to auction in entirety meaning there are no unsold spectrum blocks available. In North East, Airtel picked up 1.2 MHz out of the 5 MHz put to auction. The 900 MHz band in North East has 19 spectrum blocks or 3.8 MHz available immediately.

900 MHz - Bharti Airtel

Notably, the delayed assignments in both the circles are actually spectrum surrendered by BSNL in early January 2021. Even though BSNL has surrendered 1.2 MHz in both Gujarat and North East, the same as per DoT is available from 1st September 2021 only.

1800 MHz Band – Bharti Airtel

In the 1800 MHz band, Bharti Airtel is affected by delayed availability of acquired spectrum blocks in multiple telecom circles namely Karnataka, Odisha, Tamil Nadu, Uttar Pradesh (East) and West Bengal.

In Odisha, the entire 7.6 MHz spectrum put to auction by DoT was picked up by Reliance Jio and Bharti Airtel. In short, there are no unsold spectrum blocks at all.

1800 MHz Airtel

In Tamil Nadu, out of the 19.4 MHz spectrum put to auction by DoT, 18.2 MHz spectrum was picked up by Reliance Jio and Bharti Airtel. In short, there is only 1 unsold spectrum block that is available immediately in Chennai but from 1st September 2021 in Tamil Nadu (excluding Chennai). The rest unsold spectrum i.e 1 MHz or 5 spectrum blocks isn’t immediately available.

1800 MHz Airtel TN Chennai

In Karnataka, out of the 24.8 MHz spectrum put to auction by DoT, 21.2 MHz spectrum was picked up by Reliance Jio, Bharti Airtel, and Vodafone Idea leaving only 3.6 MHz spectrum unsold out of which only 8 spectrum blocks or 1.6 MHz is immediately available.

In Uttar Pradesh (East), there are around 44 unsold immediately available spectrum blocks as against Airtel’s need for 16 spectrum blocks whereas in West Bengal there are around 9 unsold spectrum blocks with immediate availability as against Airtel’s need for 2 spectrum blocks.

Conclusion

Now, we haven’t got any official information in public domain regarding what Bharti Airtel paid for get immediately allocated spectrum blocks but the above tables will let us figure out the same. Now, even if spectrum blocks were available immediately having gone unsold in the Auction, the important part is also whether those blocks are contiguous.

In the 1800 MHz band, Uttar Pradesh (East) and West Bengal are the only telecom circles with any remote chance of Airtel actually paying up the upfront payment in advance. In the 900 MHz band, you have got BSNL’s surrender spectrum causing issues for Airtel with delayed availability.

If we were to calculate the sum of delayed upfront payment Bharti Airtel was to make in Uttar Pradesh (East), North East, and West Bengal (Rs 63,60,000 + Rs 1,468,800,000 + Rs 41,400,000) the output comes to be Rs 1,573,800,000 or Rs 157.38 crores. The exact amount Bharti Airtel has paid DoT in April itself rather than August/September 2021.

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Airtel despite paying Rs 157.38 crores in advance for getting unsold immediately available spectrum blocks will end up having to wait to get hands on other spectrum blocks due to delayed availability.

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