Refunds total 112.6 billion rupees ($1.8 billion) and it is thought the move is intended to improve the position of both companies.
BSNL will receive 67.24 billion rupees and MTNL will get a refund of 45.34 billion rupees, with the payments staggered over a period of time.
Information and broadcasting minister Manish Tewari revealed the information following a meeting with the cabinet yesterday.
BSNL and MTNL received spectrum in 2010, but have not yet launched services in the space.
