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Thursday, September 16, 2021

Union Cabinet has cleared relief package for telecom sector, say sources

Among the various relief measures being planned, it is likely that there could be a reduction in the spectrum usage charges and licence fees.

Written by Aashish Aryan | New Delhi |
Updated: September 15, 2021 3:11:09 pm
TelecomThough the details of the relief to be offered to the debt-laden sector are not yet known, sources in the telecom ministry said that the relief would be for the sector and “not for a specific company”. (File photo)

The Union Cabinet is learnt to have cleared a package for the telecom sector on Wednesday.

Though the details of the relief to be offered to the debt-laden sector are not yet known, sources in the telecom ministry said that the relief would be for the sector and “not for a specific company”.

“There is no precedence of the government bailing out a private company as such. So that was out of question. There are both short- and long-term measures for the telecom sector which we have decided upon,” an official said.

Among the various relief measures being planned, it is likely that there could be a reduction in the spectrum usage charges (SUC) and licence fees.

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.

Apart from these, the payments for spectrum purchases, which had been deferred for up to two years (2020-21 and 2021-22) in 2019, are also likely to be extended for up to a maximum period of five years. Meanwhile, the spectrum holding period, which is currently 20 years, maybe extended beyond that.

Among the three private players in the telecom sector, 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 Chief Executive Officer (CEO) of Vodafone Nick Read made similar comments.

Read had on November 12 that year said that 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 also said that 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 this year, 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 telecom sector.

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