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Monday, September 20, 2021

Cabinet likely to take up telecom relief package today; cuts in SUC, licence fee

Currently, telecom service providers pay 3-5 per cent of adjusted gross revenue (AGR) as SUC, while they pay around 8 per cent of the AGR as licence fee.

Written by Aashish Aryan , Sunny Verma | New Delhi |
Updated: September 8, 2021 7:38:49 am

The Union Cabinet on Wednesday is likely to take up for discussions and approval a relief package for the telecom sector, sources in know of the development told The Indian Express.

Among the relief measures being discussed, there is the likelihood that a reduction in the spectrum usage charges (SUC) and licence fees could be cleared. Currently, telecom service providers pay around 3-5 per cent of adjusted gross revenue (AGR) as SUC, while they pay around 8 per cent of the AGR as licence fee.

“There is some scope in the SUC being reduced to 3 per cent flat, and the licence fee being halved. It is under consideration,” a government official said.

Apart from these, the payments for spectrum purchases, which had been deferred for up to two years (2020-21 and 2021-22) in 2019 is also likely to be extended for up to maximum period of five years, while the spectrum holding period, which is currently 20 years, maybe extended beyond that, the officials said. Among the three private players, both Vodafone Idea (Vi) and Bharti Airtel have been seeking some sort of relief for the sector from the government in the form of reduction in the levies paid by telcos, namely license fee and spectrum usage charges, as well as some waiver on the reduction of the interest rates for dues to be paid to the Department of Telecommunications (DoT).

The two companies have sought these reliefs especially after the Supreme Court’s judgment on AGR, in which the apex court had said that the definition of AGR put forth by the DoT was correct, and that telcos would have to pay the dues of the past 20 years.

Following the Supreme Court’s judgment on AGR, the former non-executive chairman and director of Vi, Kumar Mangalam Birla, had said that his company would have to “shut shop” if no relief was forthcoming from the government. Birla’s comments had then come nearly a fortnight after the global CEO of Vodafone Nick Read made similar comments.

Read had on November 12 that year said the firm’s future in India was doubtful and the company could be headed for liquidation if there was no relief from the payment of AGR dues. He had added the global arm would not commit any more equity for India as the country “effectively contributed zero value to the company’s share price”. In June, Birla had, in a letter to the Central government, offered to “hand over” his 27 per cent stake in the company to any public sector, government, or domestic financial entity or to any other firm that the government may think fit, to keep Vi going. Earlier this month, Birla, along with Read had also met Telecom Minister Ashwini Vaishnaw and discussed the health of the sector.

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