The Union Cabinet on Wednesday approved a relief package for the telecom sector that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign investment through the automatic route.
Briefing reporters on the decisions taken by the Cabinet, Telecom Minister Ashwini Vaishnav said nine structural reforms for the telecom sector were approved. The definition of AGR, which had been a major reason for the stress in the sector, has been rationalised by excluding non-telecom revenue of telecom companies. AGR refers to revenues that are considered for payment of statutory dues. The minister said that 100 per cent FDI (Foreign Direct Investment) in telecom via the automatic route was approved by the Cabinet. Among the measures approved were a four-year moratorium on unpaid dues, AGR and spectrum dues, he said. These measures are expected to ease the cash flow issues being faced by some players in the industry.
As part of the relief package, the telecos could opt to convert the interest due on their spectrum amounting to four-year moratorium, to government equity. The package comes as a relief to the struggling telecom sector that is going through a financial crunch.
The government had also decided to have a calendar of spectrum auctions to give more certainty about this important requirement of telcos. Usually, the auction may be done in the last quarter of a financial year. Vaishnav told that 9 major reforms have been done in the telecom sector. In this, the definition of AGR dues will be changed, as well as the monthly interest rate of companies has now been made annual. Apart from this, relief has also been given on fine. The duration of the spectrum has also now increased from 20 years to 30 years. The minister said that 100 per cent FDI (foreign direct investment) in telecom via the automatic route was approved by the Cabinet. Earlier, automatic investment routes were limited to 49 per cent level and approval from concerned authorities was required for foreign investment beyond the 49 per cent level.
The telecom minister said Prime Minister Narendra Modi has given the mandate to design and manufacture core and radio access network technology in the 4G and 5G networks of the country in the coming months. He said indigenous technology will be deployed in the BSNL network in the coming months.
Telecom package to provide some relief to stressed sector: Industry body COAI
Meanwhile, the telecom industry body COAI lauded telecom relief package approved by the Cabinet on Wednesday, which will be implemented prospectively and provide a breather to the sector that is reeling under heavy stress.
Cellular Operators Association of India (COAI) Director General S P Kochhar said in a statement, “On the face of it, we welcome the prospective directions of the package announced, which is aligned with our long-standing asks. Going forward, this will give some relief to our greatly stressed sector for sure.” Telecom Equipment Manufacturers Association of India (TEMA) Chairman Emeritus N K Goyal said, “For the first time since independence, during 75 years of Azadi ka Amrit Mahotsav, Indian designed, developed and manufactured 4G and 5G will be deployed in private and PSU (public sector undertaking) telecom operators’ networks. We believe this should be a road map for 6G also.” The move is meant to bring relief to companies like Vodafone Idea, which owe large sums to the government. In October 2019, the Supreme Court had asked telecom operators pay Rs 1,19,292 crore worth of AGR dues to the telecom ministry. Bharti Airtel’s dues are estimated to be Rs 43,980 crore, while Vodafone Idea’s were Rs 58,254 crore.
