In Major Relief For Telcos, Government Defers Spectrum Payments

Telecom operators owe the government nearly Rs 1.47 lakh crore in license fee (LF) and spectrum usage charges (SUC).

The move was approved by the Union Cabinet headed by Prime Minister Narendra Modi.

New Delhi:

The government on Wednesday offered relief to the country's stressed out telecom sector, which was under huge pressure to pay spectrum dues. At a meeting, the Cabinet Committee on Economic Affairs approved the plan to defer spectrum payment - to the tune of Rs 1.47 lakh crore - till 2022. The move comes days after finance minister Nirmala Sitharaman offered assurance to the companies, saying the government wanted to ensure that no company shuts operations due to financial unsustainability.

"We want no company to shut their operations. We want everyone to flourish," she had told reporters on Friday. 

After the cabinet meeting, the minister said Telecom Service Providers opting for deferment will have to provide bank guarantee for the revised payable amount.

The deferral amounts will be equally spread over the remaining instalments without any increase in the time period specified for making the payments. Interest, as stipulated during the spectrum auction, will be charged so that the net present value (NPV) of the payable amount is protected, Ms Sitharaman said.

Telecom operators owe the government nearly Rs 1.47 lakh crore in license fee (LF) and spectrum usage charges, the communications ministry told the Parliament on Wednesday. 

In September, the Supreme Court had ordered the telecom companies to pay up their dues within three months, triggering panic among the service providers. 

To set aside the due amount, both Vodafone and Bharati Airtel had posted massive losses and Vodafone said unless the government offered relief, or a legal remedy was found, it would not be able to continue its business in India. 

While Vodafone Idea posted a loss of Rs. 50,921 crore, the highest-ever quarterly loss by any corporate in India, Airtel's figure came up to Rs. 23,045 crore.

According to the British media, Vodafone CEO Nick Read said the company won't provide more capital for its India business unless the authorities make provisions enabling it to compete with domestic players like Mukesh Ambani's Reliance Jio.

Gopal Vittal, Airtel CEO for India and South Asia, expressed hope that the government will take a considerate view given the "fragile state of the industry".

Highlights

  • Deferral amount to be spread equally over remaining instalments
  • Telecom companies opting for deferment will provide bank guarantee
  • They owe government Rs 1.47 lakh crore in license fee, spectrum charges
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