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DoT, FM, NITI officials meet to rescue telecom industry

The DoT bears in mind that the government does not want a monopoly that a probable shutting down of Vodafone-Idea will create in the market

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Officers of the Department of Telecommunications (DoT) met with those from the Ministry of Finance and NITI on 23 February to discuss urgent relief measures to revive the telecom industry, where every company is struggling to pay its adjusted gross revenue (AGR) dues. In the meeting of over an hour, the officers mulled over options that the government has to provide some respite to the service providers, which include not only private companies like Vodafone-Idea and Bharti Airtel but also state-run companies like BSNL and MTNL (the government has sent AGR notices to some non-telecom companies too).

The DoT officials did not disclose the minutes of their Sunday meeting, held at a time when the telecom companies owe a whopping Rs 1.47 lakh crore of unpaid dues to the DoT. This includes Rs 92,642 crore in unpaid licence fee plus Rs 55,054 crore as outstanding spectrum usage charges. Bharti Airtel and Vodafone Idea Limited owe about 60% of the estimated dues. This includes interest and penalty for late payments.

While Bharti Airtel, which has raised about $ 3 billion in the last few months, may have sufficient funds to tide over the AGR crisis, Vodafone-Idea, having paid only 7% of its due of Rs 53,000 crore, is in deep trouble.

The DoT wishes to strike a balance between complying with the Supreme Court order on AGR dues, a source said. This will, he said, ensure the sector stays healthy and the consumer’s interest is safeguarded.

Vodafone-Idea chairman Kumar Mangalam Birla met government officers last week to plead for breathers whereas Bharti Airtel Chairman Sunil Bharti Mittal had on 20 February made an appeal to the government for a reduction in taxes and levies to extricate the sector from an “unprecedented crisis“.

DoT trying to avert monopoly

The government does not want a monopoly that a probable shutting down of Vodafone-Idea will create in the market. It wishes to retain the present three-plus-one model of competition (three private and one public sector company).

The Supreme Court had in October 2019 upheld the position of the DoT that revenue from non-core businesses must be included in calculating the AGR dues. A company pays a share of this as licence and spectrum fee to the state.

The apex court on 14 February rejected mobile carriers’ plea for extension in the payment deadline. It ordered all of them to deposit an estimated Rs 1.47 lakh crore worth of dues for spectrum and licences by the midnight of that very day, failing which it would initiate contempt proceedings against top executives of these companies.

Telecom companies in India are struggling for reasons other than AGR. Their losses, debt and additional liability are mounting. They may default on existing loans.

Vodafone-Idea has paid up only Rs 3,500 crore in two parts. Out of its estimated liability of over Rs 35,000 crore, Bharti Airtel has paid Rs 10,000 crore. Tata Teleservices has made a payment of Rs 2,197 crore. The Supreme Court ruling of 24 October shot their liabilities through the roof.

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