Australia's Communications Minister Stephen Conroy is asking Telstra and Vodafone to pay a combined AU$1.4 billion (US$1.43 billion) to renew their existing 800Mhz spectrum licenses.

The licenses expire at the end of 2013, and if the networks refuse to pay the fee they could be put up for auction.

The Minister made the demand in a response to a consultation on the licenses. Under the proposal, Telstra will have to pay $758 million to renew its licence and Vodafone about $678 million.

The government is aiming to earn AU$4 billion in 2012-13 from the sale of radio spectrum, including a 700Mhz digital dividend action.

Industry sources told the Australian Financial Review that Senator Conroy's demand came after negotiations broke down between Telstra and the government. A deal was said to be close when Telstra baulked at paying the price the department demanded, on advice from the Department of Finance.

The consultation on reissue of expiring 15-year spectrum licences closes on January 16.