Panel approves relief for telecom operators
The Telecom Commission has approved increasing the period over which deferred spectrum payments can be made to 16 years, as well as a change in calculation of interest for delayed payments. However, telecom companies will not get any relief on spectrum charge or licence fee. The industry says the Commission’ s measures will give some relief to operators in the long run but the current problem of financial stress remains. KIRANRATHEE reports
The Telecom Commission (TC) has approved an increase in the timeframe for deferred spectrum payments to 16 years, as well as a change in calculation of interest for delayed payments.
However, telecom companies will not get any relief on spectrum charge or licence fee. The industry says the TC’s measures will give some relief to operators in the long run but the current problem of financial stress remains.
The government had formed an inter-ministerial group (IMG), to address the financial stress in the sector and it had recommended all these measures. The TC in its earlier meeting had sought clarifications on some points. After getting these, Friday’s decisions were taken. The Cabinet will now take a final call. A source said there would be no further relief for telecom operators from the IMG.
According to sources, the TC approved an increase in the tenure for deferred spectrum payment to 16 years from the current 10 years. The TC had asked IMG if it should be 12 or 14 but after discussion, it was decided to make it 16 years.
Also, using the marginal cost of funds-based lending rate (MCLR) for calculating the interest on delayed payment, instead of the prime lending rate (PLR), was approved. “It was decided the rate would be MCLR+4. It will give two-three basis points relief to operators, as the PLR rate had been around 14 and MCLR was around eight; so, MCLR+4 means the new rate will be around 12, a source explained.
The spectrum holding cap issue had already been referred back to the Telecom Regulatory Authority of India (Trai). The department of Telecommunications (DOT) has already sought legal opinion on the Adjusted Gross Revenue (AGR) applicable in the case of receipts from spectrum trading. The TC is likely to take up both issues in its next meeting, by when it expects the replies.
The longer duration of deferred spectrum payment could increase the cash flow of telecom operators by ~55,000 crore. Due to the change of PLR to MCLR, cash flow benefits of ~20,000 could accrue.
The industry’s debt dues are estimated at ~4.5 lakh crore, incurred mainly on account of payment for spectrum, beside other levies. With the entry of Reliance Jio last year, the industry has been locked in a rate war. Incumbent operators have been contending there is pressure on revenue and profitability, blaming the rock-bottom data rates and free offerings of Jio.