Govt raises relief hopes for telcos, sets up panel

Ailing firms’ demands, steps to relieve stress to be examined

NEW DELHI: A government panel will examine the problems faced by telecom operators and suggest ways to revive their financial health, amid plunging industry revenues and mounting debt.

A committee of secretaries (CoS) under the cabinet secretary will consider the demands of telcos and suggest ways to alleviate their financial stress and create a favourable investment environment, said a person with direct knowledge of the matter.

“The CoS will look into the demand of telcos for deferment of spectrum auction payment dues for the years 2020-21 and 2021-22 in order to ease cash flow,” the person said on condition of anonymity.

The panel was set up a day after an unsigned paper seeking a waiver of interest and penalties on the unpaid amount, as well as staggering payment of principal licence fee over 10 years was submitted to the DoT. Bharti Airtel chairman Sunil Bharti Mittal and his brother Rajan Mittal had also met telecom minister Ravi Shankar Prasad and telecom secretary Anshu Prakash on Monday.

In the latest fallout of the cloud of uncertainty that has darkened the industry’s prospects, Bharti Airtel on Tuesday postponed announcing its September quarter earnings as it awaits clarity on a Supreme Court verdict that directed operators to pay at least ₹92,000 crore in past dues to the government. The Bharti Airtel stock plunged 3.41%.

The financial health of telcos was already under severe pressure after the entry of Reliance Jio Infocomm Ltd in September 2016.

The Mukesh Ambani-controlled company disrupted the industry, first through free services and later through ultracheap data tariffs, triggering a wave of consolidation.

Smaller operators either shut shop or sold their assets to bigger telcos.

As part of the relief measures proposed for the industry, the government is also considering a floor price for telecom services. At present, operators are free to charge users any tariff they want.

“In parallel, it is expected that the Telecom Regulatory Authority of India (Trai) will also examine the aspect of minimum charge (floor tariff) for voice and data services to ensure that the financial health of the telecom sector remains robust and viability is sustained,” the person said.

The government panel will also look at measures such as reducing levies, including spectrum usage charges and the universal service obligation fund (Usof) fee paid by telcos.

Currently, telcos pay 3-6% and 8% of their adjusted gross revenue (AGR) as spectrum usage charges and licence fee (including Usof), respectively.

Emails sent to the department of telecommunications (DoT), Trai, Airtel, Vodafone Idea and Jio were unanswered till press time.

The decision to set up a panel comes a week after the Supreme Court upheld the Centre’s broader definition of revenue on which it calculates levies on telcos.

The court rejected the interpretation proposed by telcos that excluded revenue from non-core telecom operations such as rent, dividend and interest income.

Among the companies that have survived the consolidation in the sector, Bharti Airtel and Vodafone Idea are the worst hit by the apex court order.

Vodafone Idea had previously said it would ask the federal government for relief on payments of at least $4 billion after the Supreme Court decision.

Analysts had said the charges could force the company out of business. Shares in Vodafone Idea closed 8.3% down on Tuesday.

To be sure, any relief measures suggested by the new panel will also have to be cleared by the Digital Communications Commission and the Union cabinet.

and contributed to this story.