New Delhi: Union Cabinet can consider on Wednesday the moratorium on payment of spectrum contributions by telecommunications companies as part of the package for this sector aim to provide assistance to companies such as Vodafone ideas that must pay thousands of rupees in the past legal contributions.
The assistance package that is considered includes telecommunications companies getting options to convert interest in the spectrum controlled period of the four-year moratorium into government equity, three sources with knowledge of these developments.
The move came six weeks after billionaire Kumar Mangalam Birla resigned as Chair of Vodafone Idea Ltd (VIL) on August 4 reported June 7 Birla’s letter to the Cabinet Secretary offered its shares in the idea of Vodafone to the government or any company approved by the government for free.
Vil, which is made from the British Merger Telecom Giant Vodafone’s unit India and the idea of Birla Cellular Ltd, must pay around Rs 50.399.63 Crore in legal contributions from past years.
However, some in the government, however, asked by using taxpayer money for Telcos bailouts which failed to provide legal fee provisions during fat legal cases.
Overall, the telecommunications assistance package is likely to describe the reform for this sector by providing a moratorium on unpaid contributions, redefining AGR (adjustable gross income) in prospectively and cuts the cost of using spectrum, said source.
The package, which was originally expected to be taken by the cabinet last week, will offer breath to three industrial private players, when Vil faces the existential crisis.
The source said that these steps would become prospective, and would pave the way for reform in this sector.
Among the steps being discussed is a four-year moratorium on payments, AGR and Spectrum, the AGR redefinition to exclude non-telecommunications items, and cut into pieces, said the source, adding that this concrete step is expected to relieve cash flow problems.
Faced by several players in this industry.
The accidental steps will offer immediate assistance to this sector, they say adding that there is also a conversion component related to equity, which is being fulfilled, which, if accepted, will offer Gestur Goodwill and help the company collect funds.
Vodafone’s idea, in its annual report, has marked the “unsustainable financial coercion” and hopes that the government will provide the support needed to overcome “all structural problems” faced by this sector.
The total dirty debt (excluding lending obligations and includes interest that still has to be paid but does not maturity) on June 30, 2021 of the VIL reaches Rs 1,91,590 Crore, which consists of the spectrum payment obligation of the spectrum of 1,06,010 crore and adjustment Gross income (AGR.) The obligation of Rs 62,180 Crore caused by the government.
Industrial analysts have also sounded alarms at the risk of Indian telecommunications markets turning into duopoly.
The APEX Coai Association recently made a strong tone to be cut into pieces, doubling the mastery of radiowave auction, along with a 7-10-year moratorium for spectrum payments, to overcome the survival of this sector.
Last month, Sunil Mittal, Chair of India’s second largest telecommunications company Bharti Airtel, has made a passionate tone for tariff increases and cutting government levies to save the industry.
Mittal said while 35 percent of industrial revenues were given to the government in taxes and levies, Telcos was loaded with extraordinary debt from adjustable spectrum contributions and payments.
Levies are too high in the telecommunications sector, Mittal said adding that “levies and expenses to the industry need to be lowered” for India to truly realize the digital vision.
Cabinet can consider the assistance package for the telecommunications sector on Wednesday
