Mint Explainer: Who owns India's telecom spectrum?

Core Viewpoint - The Supreme Court of India's decision on the treatment of telecom spectrum held by Aircel and Reliance Communications (RCom) during their insolvency proceedings is crucial, as it will clarify whether this spectrum can be liquidated under the Insolvency and Bankruptcy Code (IBC) for lenders to recover their dues [2][4]. Group 1: Telecom Spectrum Overview - Telecom spectrum is a vital resource for wireless communication, divided into specific frequencies and sold by the government to telecom companies for mobile and internet services [3]. - The spectrum is considered the most crucial asset for telecom operators, and there is ongoing contention among the government, banks, and asset reconstruction firms regarding its ownership and treatment during bankruptcy [4]. Group 2: Spectrum Auction and Government Policy - The government conducts spectrum auctions to promote competition and generate revenue, with a proposal for annual auctions approved in September 2021 [5]. - However, the auction schedule has been inconsistent, with no auctions held in 2023 and only ₹11,340.78 crore collected in the 2024 auction, marking one of the lowest sums since competitive bidding began in 2010 [6]. Group 3: Bankruptcy and Dues - RCom, Aircel, and Videocon went bankrupt between 2018 and 2019, leaving unpaid statutory dues exceeding ₹40,000 crore, leading the telecom department to assert that spectrum cannot be transferred without settling these dues [8]. - The telecom department has recovered very little from operational creditors, with Aircel's resolution plan providing only ₹28.50 crore to creditors who claimed ₹17,462 crore [9]. Group 4: Bank Perspectives - State Bank of India (SBI), a major lender to RCom and Aircel, has an exposure of ₹12,000 crore and argues that telecom spectrum should be included in the insolvency process to recover dues, which conflicts with the government's stance [11]. - More than 53 financial lenders claimed approximately ₹57,382 crore from RCom, with various banks involved, including SBI, Bank of Baroda, and Canara Bank [12]. Group 5: Asset Reconstruction Companies - UV Asset Reconstruction Co Ltd (UVARCL) won the bid for Aircel and RCom, with financial creditors expecting to recover ₹6,630 crore from claims of ₹58,795 crore, indicating a significant haircut of 89% [13]. - UVARCL initially estimated generating ₹800-1,300 crore from selling Aircel's spectrum, but this is now uncertain due to the government's position on leasing rather than selling the airwaves [14].