New Delhi: Union Cabinet on Wednesday cleans a reform-oriented bailout package for the surrounding telecommunications industry – freeing cash for companies that stretch financially by throwing a four-year moratorium on spectrum and AGR payments, while also cutting costs and offering the Lenient definition of recognition of income To speed up the transition to 5G.
That step, which was anticipated after the idea of ​​Vodafone appeared towards bankruptcy, would benefit all players, including Bharti Airtel and Reliance Jio.
It was already in the works for the past few months but it was accelerated as the idea of ​​the idea of ​​Vodafone Kumar Mangalam Birla almost threw a towel in the midst of losses and heavy debts.
is the first to report a series of relief steps.
Telecommunication Minister Ashwini Vaishnaw said “Structural Reform” for this sector is neutral income – because interest will be subject to post-moratorium – and has been agreed to ensure adequate competition in this sector.
The government decided to remove non-telecommunication revenue from the AGR definition, which will save outgo taxes on the cost of using spectrum and license fees in the future.
It also cut the bank’s guarantee mandate to license fees and other similar costs by 80% and said there would be no requirements for some bank guarantees in various regions.
Interest charged for pending payments also reduced, and the penalty was issued.
These steps tend to leave enough cash in the hands of the industry to plug in their financial misery.
The government has also saved the option to convert a portion of the interest expense to equity if the need arises at the end of the moratorium.
And, to encourage the company to move to 5G, the government announced a positive series that must make the industry migrate to the next generation telecommunications technology.
This includes increasing the tenure of spectrum ownership by 10 years significantly – raising it to 30 years from existing 20 years.
The spectrum submission will be permitted after 10 years for the spectrum obtained in the future, while the government also said that it would not impose the cost of immortality in the future.
This is also increasingly liberalization of foreign inflows in this sector, allowing 100% FDI below the automatic route.
However, it remains cautious for investments that come from China and countries that share land borders with India, say they will be studied.