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Telecom companies get two years to pay spectrum dues

Representational image. File

Representational image. File   | Photo Credit: Prashant Nakwe

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The move will help Bharti Airtel prevent an outgo of ₹11,746 crore, while for Vodafone Idea and Reliance Jio, the amount stands at ₹23,920 crore and ₹ 6,670 crore, respectively.

The Union Cabinet on Wednesday approved a two-year moratorium to telecom operators on pending spectrum payment, which will help telcos avoid an immediate outflow of over ₹42,000 crore.

“Receipt of the instalments due for 2020-21 and 2021-22 has been deferred,” Finance Minister Nirmala Sitharaman told a press meet.

The deferred amount will be equally spread over the remaining instalments to be paid by the companies “without any increase in the existing time period specified for making the instalment payments”.

“The interest as stipulated while auctioning of the concerned spectrum will, however, be charged so that NPV [net present value] of the payable amount is protected,” the Minister added. Additionally, the TSPs will need to securitise the next payable annual instalment by financial bank guarantee, as per the current practice.

The move will help Bharti Airtel prevent an outgo of ₹11,746 crore, while for Vodafone Idea and Reliance Jio, the amount stands at ₹23,920 crore and ₹6,670 crore, respectively.

A senior Telecom Ministry official said while the government is willing help the sector, the top three operators have been asked to meet and discuss measures industry can take to mitigate the stress in the sector. “A meeting of representatives from the three firms in likely in the next few days,” the official said.

On the issue of liabilities arising due to the recent Supreme Court judgement on AGR, the Ministry official said, “It is a purely legal issue... if there has to be any extension or calibration... it has to be under the direction of the court... the companies will have to go to the Supreme Court.”

 

As per the government, following the Supreme Court judgement, the telcos now owe ₹1.47 lakh crore in license fees (₹92,642 crore) and spectrum usage charge (₹55,054.51 crore). Of this, Bharti Airtel owes nearly ₹35,586 crore and Vodafone Idea owes over ₹53,000 crore.

“The government is firm... that there will be no monopoly by any operator... but for AGR, teh companies very well knew their liabilities...why did they not make contingency provisions in their books of accounts? This is the most elementary account procedure was not known to them?”

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The Cellular Operators' Association of India (COAI) said the move will certainly provide some immediate cash flow relief to the industry. However, the high level of levies and taxes continues to be a challenge for the sector. “We welcome the fact that the government recognises the financial distress of the telecom sector and has provided relief in the form of deferments of spectrum payments,” Rajan S. Mathews, DG, COAI, said in a statement.
Mr. Mathews said the telcos pay up to 30% of their revenues to the government, by way of various levies and taxes, which is an “enormous burden”.
“We have been requesting the Government that these levies and taxes be rationalised and the same is also one of the important goals of NDCP. However, these aspects of the NDCP are yet to be operationalised and we are engaging with the government on the same,” he added.

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Printable version | Dec 6, 2019 1:43:42 AM | https://www.thehindu.com/news/national/cabinet-approves-two-year-moratorium-on-spectrum-payments-for-telecom-companies/article30029666.ece

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