A committee of secretaries will take stock of the problems of the debt-ridden telecom sector and suggest measures to overcome the problems so that relief can be arranged for companies like Vodafone Idea and Bharti Airtel. An additional statutory liability of Rs 80000 crore has been incurred on these companies.
The additional liability situation has arisen after the Supreme Court approved the DoT’s stand on Adjusted Gross Revenue (AGR).
Telecom companies going to get relief package
Department of Telecom officials said that the committee of secretaries headed by Cabinet Secretary Rajiv Gaba will consider steps like giving exemption of two years (for FY 2020 and FY 2021) from spectrum payments so that the companies’ cash flow situation can be corrected.
In addition, the committee will also consider a reduction in the Universal Service Obligation Fund (USOF) and spectrum usage charges included in the license fee. The USOF is currently 5 percent of AGR and SUC is now about 3 percent of AGR. The committee may include secretaries of telecom, finance and law ministries.
TRAI trying to give relief
An official said that the Telecom Regulatory Authority of India (TRAI) may also consider the minimum charge factor for voice.
Also, data services to ensure that the financial health of the telecom sector is maintained properly.
7 lakh crore loan on telecom companies
ET had reported in the October 24 issue that the government was considering fixing minimum tariffs. However, to provide long-term support to the sector. In the midst of a fierce price war, the sector is reeling under declining income, softening cash flow and debt of over Rs 7 lakh crore. Of the three private companies, only Reliance Jio is profitable.
Appeal for the immediate relief package
Through the industry body Cellular Operators Association of India (COAI), companies have requested the government to move quickly on the relief package. COAI Director General Rajan Mathews said, “In view of the recent order of the Supreme Court on AGR, we suggest that the Committee of Secretaries should consider giving an immediate relief package.
The financial condition of the companies going to maintain. The long term Relief measures looked into to ensure the long-term financial sustainability of the sector.
Aggregate gross revenue of telecom industry decreased
Officials said an analysis of the financial performance of mobile phone companies. It showed that between 2017-18 and 2018-19, the industry’s aggregate gross revenue ‘reduced’.
Telecom minister Ravi Shankar Prasad had earlier said that the AGR of the sector has come down. It came from Rs 1.85 lakh crore in FY 2017 to Rs 1.39 lakh crore in FY 2019.
However, he had sought relief from the finance ministry citing this.