21 Nov 2019
Government defers spectrum dues, Telcos get Rs. 42,000 crore lifeline
In a major relief for the ailing telecom sector, the government on Wednesday approved the recommendation of the Committee of Secretaries (CoS) on providing relief to the stressed telcos and allowed a two-year moratorium on spectrum payment.
The development comes days after Finance Minister Nirmala Sitharaman assured that the government doesn't want any company to shut shop over financial concerns.
Spectrum payments deferred for telcos till 2022
Speaking at a press conference after a Cabinet meeting, Sitharaman announced relief on spectrum auction installments due from the telecom service providers (TSPs) for the years 2020-21 and 2021-22.
Hence, the next spectrum payment will only be made in the in financial year 2022-23 by telcos Vodafone Idea, Bharti Airtel and Reliance Jio.
The moratorium gives telcos an immediate relief of over Rs. 42,000cr.
'Deferred amounts will be equally spread over remaining installment'
The Finance Minister said, "These deferred amounts will be equally spread over the remaining installments to be paid by the TSPs without any increase in the existing time period specified for making the installment payment."
She added, "The interest as stipulated while auctioning off the concerned spectrum will, however, be charged so that NPV (net present value) of the payable amount is protected."
Telecom operators owe government Rs. 1.47 lakh crore
Notably, the communications ministry told the Parliament on Wednesday that telcos owe the government around Rs. 1.47 lakh crore in license fee (LF) and spectrum usage charges.
The Supreme Court in September had ordered the telecom operators to pay their dues within three months.
Thereafter, Vodafone and Bharti Airtel post losses amounting to Rs. 50,921 crore and Rs. 23,045 crore respectively.
Vodafone, Airtel earlier asked India to ease off
Earlier, British media reported that Vodafone CEO Nick Read issued an ultimatum to India to "take their boots off the neck of the industry" and make provisions allowing Vodafone Idea to compete with Mukesh Ambani on 5G.
Meanwhile, Airtel CEO (India and South Asia) Gopal Vittal expressed hope that the government would take considerate view on adjusted gross revenue considering the industry's "fragile state."
Telcos to securitize next payable installment with bank guarantee: Sitharaman
Sitharaman further said that telcos will continue to securitize the next payable annual installment via a bank guarantee. Hence, telcos taking the two-year moratorium are to provide the government with a financial bank guarantee of the revised annual installment amount payable for fiscal 2022-23.