Telcosmay have to wait longer for relief

The inter-ministerial group (IMG) to recommend on financial relief for the telecom sector is yet to clarify on a number of issues raised by the Telecom Commission.

Among the IMG suggestions are extension of the time frame for spectrum payment and changes in interest rates. The report was discussed earlier this month by the inter-ministerial Telecom Commission (TC), also the highest-decision making body for the department of telecommunications (DoT).

Sources said the IMG had clarified on some issues and some were to be clarified later. The TC will meet on Friday to discuss the clarifications and some measures might be announced.

Sources further said the DoT will be seeking legal opinion over the issue of adjusted gross revenue (AGR) in spectrum trading between two companies. They say DoT has not decided whether to ask the law

Panel suggested extension of time frame for spectrum payment and changes in interest rates

It suggested only profit or differential should be considered as adjusted gross revenue, not whole ministry or the attorney general. The IMG had suggested only the profit or differential should be considered as AGR, not the whole deal value, in spectrum trading.

Also, for extending the deferred payment schedule to 16 years and the marginal cost of funds-based lending rate, not the prime lending rate, for financially stressed telcos.

The recommendations, industry players say, will help in the long run as these will have a bearing on future cash flow. However, these don’t address current problems that have caused financial stress, they said. deal value, in spectrum trading

For extending deferred payment schedule to 16 years & marginal cost of fundsbased lending rate, not the prime lending rate, for financially-stressed telcos

The IMG had rejected the industry's demand for some relief on licence fee and spectrum usage charge. The telcos were looking for reduction in the Universal Service Obligation Fund levy, now five per cent of AGR.

The IMG — senior officials from the ministries of finance and DoTs — was constituted in mid-May to "examine systemic issues affecting viability and repayment capacity in the telecom sector and furnish recommendations for resolution of stressed assets". Debt in the industry is pegged at Rs 4.5 lakh crore, incurred mainly on account of payment for spectrum, and other levies.

Meanwhile, speaking about the coming India Mobile Congress, Telecom Secretary Aruna Sundararajan said the government had received very good response from those wanting to invest in the sector. She said some of these had sought some change in regulatory policies. As examples, she said, “In the case of 5G (fifth-generation technology), they want certain bands to be delicensed, blocks to be of a certain size…in (the) Make in India (scheme), some have said they want basic customs duty reduced on some items and increased on some that they will be manufacturing.”

She did not name which companies had sought these changes ; these are initial discussions. The secretary further said industry is prepared to take a long-term view on investment.

On the India Mobile Congress, she said it was going to be an annual event and would be further scaled up.