Sops in the works to push telcos ahead

The financially stretched telecom industry could possibly get a breather with the government discussing relief options including a 1-2 per cent reduction in the licence fee. The government is also considering a cut in the interest rate paid by operators for making deferred payment for spectrum and a possible extension of the moratorium on payment for spectrum or extending the tenure of the payment beyond eight years.

While this will help the sector, which is saddled with debts of over ~4,50,000 crore, two demands by the industry have not found favour — reduction in the amount operators pay to the Universal Service Obligation (USO) fund and a cut in the spectrum user charges.

At present, the telecom companies pay an average of eight per cent of adjusted gross revenue (AGR) as licence fee. The telcos have been demanding that it should be brought down by five per cent. A one per cent cut translates into a relief of around ~2,000 crore for the industry based on AGR figures of 2016. In this year, according to Telecom Regulatory Authority of India’s data, the AGR of the industry was ~1,98,000 crore.

The government is also looking at reducing the interest burden of operators under the deferred payment scheme. At present, the interest charges vary based on the year of spectrum auction. Interest charge was 9.75 per cent for spectrum auctioned in 2012 and 2013, 10 per cent for 2014 and 2016, and 9.3 per cent for 2016 in the second auction.

The industry has also been pushing for a haircut in the percentage that they pay to the USO fund — from 5 per cent of AGR to at least 3 per cent. But, according to sources, the government might be reluctant as this cash is being used for increasing rural telephone density as well as on Narendra Modi’s pet project of BharatNet, which plans to connect 250,000 gram panchayats by providing broadband connectivity.

On Wednesday, the Cabinet approved a revised implementation strategy for BharatNet, to connect all the gram panchayats by March 2019. The project is expected to entail an expenditure of ~42,068 crore.

The telecom industry has been demanding financial relief from the government and in presentations to the inter-ministreal group, set up to find a solution to stress in the sector, incumbents said that they lost over ~8,200 crore in revenues in the second half of 2016-17 over the first half of the same financial year. They blamed this on the predatory pricing by Reliance Jio, which offered its 4G services free of cost in the initial months.