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Telcos seek help on ‘priority basis’

Seek adjustment of GST credit in AGR dues, doing away with bank guarantees

February 27, 2020 10:13 pm | Updated November 28, 2021 11:29 am IST - NEW DELHI

Distress call: COAI has sought that payment of the balance AGR amount be allowed in a staggered manner. M. Periasamy

Distress call: COAI has sought that payment of the balance AGR amount be allowed in a staggered manner. M. Periasamy

Reeling under pressure to clear their adjusted gross revenue-related dues, telecom companies have sent an SOS to the government seeking measures on a ‘priority basis’ to facilitate reduction of financial stress in the industry.

In a letter to various government departments, including the Prime Minister’s Office, industry body COAI highlighted that banks were currently unwilling to take any risk with regard to the telecom sector and there was a need to give a clear message to banks that the government was there to support the sector.

“The banks are constantly asking telcos to reduce their exposures by refusing to issue new bank guarantees or even to renew the bank guarantees,” COAI Director General Rajan Mathews said, adding that the requirement for financial bank guarantees (FBGs) to secure payment of licence fee should be done away with.

“However, if DoT is still of the opinion that FBGs are still required, then it should at least be reduced to one quarter’s license fee.”

The letter written to Telecom Secretary Anshu Prakash has also been marked to the Telecom Minister, Finance Minister, Principal Secretary, PMO, Cabinet Secretary, DPIIT Secretary, DEA Secretary and Niti Aayog CEO.

On AGR dues, Mr. Mathews requested that as individual firms were stretching to make as much payment possible in a stressed financial situation, the government could adjust the GST credit due to the telcos from the government. Following this, the payment of the balance amount may be allowed in a staggered manner. “It is requested that a moratorium of 3 years be provided, as we expect that it will take at least that much time to recover the health of the sector, followed by a payment tenure of 15 years at a simple interest of 6%,” the industry body said.

As an alternative, Mr. Mathews said the government may consider granting loan equal to the AGR amount at 6% rate of interest so that the AGR liability may be discharged immediately.

COAI also reiterated its demand for reduction in licence fee, spectrum usage charges as well as rationalisation of universal service levy.

The industry body has also pitched for implementation of floor price for telecom tariffs April 1, 2020 onwards. “Floor pricing is imperative to ensure the sector is sustainable, and in a position to bear the deferred spectrum and AGR dues, while continuing to invest in world class networks and services,” it said.

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