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November 30, 2020

42000 crore relief to Airtel, Vodafone-Idea and Reliance Jio

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  • Government has given two years exemption to telecom companies to pay spectrum
  • With this, Voda-Idea, Airtel and Jio will get relief of 42 thousand crores
  • Airtel and Vodafone Idea appealed to the government to waive penalty and interest
  • These companies have a debt of over seven lakh crore rupees


The government has announced a big relief to telecom companies. At a meeting of the Cabinet Committee on Economic Affairs on Wednesday. Also, it was decided to give two years of exemption on spectrum payments to telecom companies. Bharti Airtel, Vodafone Idea and Reliance Jio will get a relief of Rs 42,000 crore due to the postponement of spectrum payments for FY 2020-21 and 2021-22.

Big relief to Airtel, Vodafone-Idea and Reliance Jio

Giving information about the decisions taken in the meeting, Finance Nirmala Sitharaman said that in view of the problems faced by the telecom companies, the cabinet decided to postpone the payment of installments related to spectrum auction for two years. Sitharaman said that the deferred spectrum payment would be divided equally among the rest of the installments and there would be no increase in the existing time period. The finance minister said that telecom companies will have to pay fixed interest on deferred spectrum payments.

The Supreme Court also took the side of the government

Last month, the Supreme Court took the government’s side in the AGR controversy. It had said that the non-core revenue of telecom companies would also include in its calculations. This increased the liability of companies to 92,642 crores in terms of license fees, penalty and interest till July 2019. At the same time, due to SUC, the burden of companies increased by 55,054 crores by the end of October. On Wednesday, Voda Idea shares rose 17.5 percent to close at Rs 7.07 on the BSE, while Airtel shares were down marginally by 0.46 percent to Rs 437.25. Shares of Reliance Industries, the owner of Jio, rose 2.47 percent to close at Rs 1,547.05.

Companies had appealed to waive interest

Airtel and Vodafone Idea had appealed to the government to waive penalty and interest and also demanded more time to repay the principal amount. He also said that it should exempt from payment for the first two years. The amount outstanding on Airtel, including the amount of penalty and interest, is 75 percent of the original dues. The two companies made provisioning (set aside money for payment) in the September quarter due to AGR, which led to a record loss of 51,000 crore to Voda Idea and 23,000 crore to Airtel.

Loan of over 7 lakh crores

The Center had set up a committee headed by Cabinet Secretary Rajiv Gaba, to consider measures to provide relief to telecom companies. Apart from Gaba, the committee comprised the CEOs of the Department of Economic Affairs, Financial Affairs, Revenue, Corporate Affairs, Telecom, IT Secretaries and NITI Aayog. Telecom companies have been facing price war for three years and have a debt of over seven lakh crore rupees.

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