Friday 28 January 2022
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Telecom crisis may lead to monopoly, delay in 5G

Here are the measures the government is mulling over to bring the telecom industry out of the rut

The government is ready to extend all possible help to the telecom sector in crisis. Work is underway to explore the possibilities of how companies can be helped. Along with many financial concessions, the government is also considering a new system of tariffs. The government does not want the number of companies in this sector to be further reduced, creating a monopoly-like situation.

According to sources in the Ministry of Communications, the government is currently not in a position to take any action on the current adjusted gross revenue (AGR) payment crisis the telecom companies are going through. The Supreme Court ordered the payment of AGR. Therefore, any such concession can be obtained from the Supreme Court alone.

However, an official of the ministry says that there is a possibility that some concession in interest and penalty can be made on the outstanding of AGR.

In addition, the committee of secretaries constituted under the chairmanship of the Cabinet secretary is considering several options to give relief to the telecom companies. These include options like reducing the USO fee from 5% to 3%, reviewing bank guarantees for companies on a half-yearly basis, and adjusting license fees and spectrum charges for companies with input credit of GST. An alternative before the committee is to reduce the GST rate from 18% to 12%.

Sources say that changes in the existing tariff regime of telecom companies also are under consideration. The government is considering whether a separate tariff plan can be arranged for voice and data. Sources say that the government may put a suggestion to this effect before TRAI. If approved by the regulatory body, customers will have to pay a fee for each voice call. However, since Reliance Jio, Bharti Airtel and Vodafone-Idea have already increased their tariffs to cope with the AGR situation, the government fears consumers will resent a further cost addition.

Second, due to the separate plan of data, its use can be controlled.

According to a senior ministry official, the government wants to bring the sector out of the rut as soon as possible. The longer the companies take to emerge from the financial crisis, the more delayed the auction of 5G spectrum will be. The government does not want the country to lag behind in entering the next phase of technology.

The government wants to make the country a big hub in the field of data analytics and artificial intelligence. But the basic requirement for this leap in technology is 5G. Therefore, the government does not want the country to lag China or other countries because of the poor health of the telecom companies.

Meanwhile, telecom companies Bharti Airtel and Vodafone-Idea have filed a review petition in the Supreme Court regarding interest and penalty payment on AGR. The companies have requested the apex court to reconsider some of the directives issued about AGR in its decision on license fees.

The court in its 24 October judgment upheld the government’s view that revenue from non-telecom services can be considered a part of the AGR. According to this definition of AGR, the court justified the assessment of the Department of Telecommunications of liabilities of about Rs 92,000 crore on telecom companies.

Bharti Airtel, in its petition, has asked the court to clarify the situation regarding interest and penalty related to AGR and penalty on interest and has appealed to be heard in open court on the subject. Earlier in the affidavit filed in the court, the Department of Telecommunications had said that there was a balance of Rs 21,682.13 crore as license fee on Airtel and Rs 19,823.71 crore on Vodafone.

There is a license fee of Rs 16,456.47 crore on Reliance Communications, Rs 2098.72 crore on BSNL and Rs 2,537.48 crore on MTNL. The Supreme Court, in its judgment, said that the interest and penalty amount outstanding on the telecom companies has been correctly assessed. The court had clarified that there would be no litigation in this and the court would set a deadline for the telecom companies regarding these liabilities.

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