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Wednesday 29 January 2020

Telecom cos may pay spectrum instalment 2 yrs later

This is not a bail-out package; the government has merely allowed the telecom companies to pay their dues later, leaving AGR untouched

As anticipated, the government gave a two-year relief to the telecommunication (telecom) industry on Wednesday by way of extending the deadline for the payment of spectrum charges by two years. Telecom companies have been allowed to pay the outstanding spectrum charges of 2020-21 and 2021-22 in equal instalments for the rest of the year.

In effect, the industry has been spared immediate payment of Rs 42,000 crore. This decision of the government has brought relief to the telecom companies struggling with a financial crisis. Finance Minister Nirmala Sitharaman shared this information with the media after the meeting of the Union Cabinet chaired by Prime Minister Narendra Modi on 20 November.

Sitharaman said that the total period of payment of spectrum charges for telecom companies has not been increased. Rather, an exemption has been given to pay the balance of two years in equal instalments during the remaining years. But telecom companies will have to pay interest for this deferred period of two years. There is no exemption in that. So that the net dues remain as they are.

Telecom companies that want a two-year exemption in the payment of spectrum fees will not get a direct rebate. But if they want, they can give bank guarantee of worth equal to the instalments in lieu of the payment.

On Monday, the Cellular Operators Association of India (COAI), the organisation of the telecom industry, had sought three years for the payment of the spectrum charges. COAI director-general Rajan Mathews had said that operators needed a big relief.

Telecom cos must pay penalties due: RS Prasad

The Union Cabinet has announced a small relief to the telecom industry as of now to get out of the financial crisis, but Union Communications Minister Ravi Shankar Prasad made it clear in the Lok Sabha that after the Supreme Court’s decision, Bharti Airtel, Vodafone-Idea and other telecom companies owe about Rs 1.5 lakh crore to government, which they will have to pay.

At present, there is no proposal before the government to give any relaxation in its interest and penalty.

In response to different queries on the condition of the telecom industry, Prasad said the dues of telecom companies included Rs 92,642 crore in license fee and Rs 55,054 crore in spectrum usage charges (SUC). These liabilities have been assessed on the basis of the Supreme Court’s decision that non-telecom revenue will be included in the adjusted gross revenue (AGR). This amount will be re-determined after the AGR data is finalised.

There is no relief to the telecom industry in the AGR part as that due has been determined by the Supreme Court. The government has asked the telecom companies to make the payment and submit the necessary documents as per the Supreme Court order.

After the Supreme Court’s decision of 24 October, Bharti Airtel owes approximately Rs 35,586 crore. This includes license fees of Rs 21,682 crore while SUC of Rs 13,904 crore. This excludes the dues of Telenor and Tata TeleServices.

Vodafone-Idea has a total liability of Rs 53,038 crore, which includes Rs 28,309 crore license fees and SUC arrears of Rs 24,729 crore.

Reliance Communications Ltd and Reliance Telecommunication owe a license fee of Rs 16,457 crore and SUC of Rs 4,683.78 crores.

In total, 15 companies owe license fees and 20 companies owe SUC.

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