Govt may of­fer re­lief if tele­com sec­tor reaches con­sen­sus on stress

Mint ST - - CORPORATE - [email protected] NEW DELHI

Tele­com oper­a­tors may not get any fi­nan­cial re­lief on spec­trum-re­lated dues un­less the top three tel­cos—vodafone Idea Ltd, Bharti Airtel Ltd and Re­liance Jio In­fo­comm Ltd—agree there is a fi­nan­cial stress in the in­dus­try, a gov­ern­ment of­fi­cial said.

Last month, Vodafone Idea chair­man Ku­mar Man­galam Birla met of­fi­cials from the fi­nance min­istry and tele­com depart­ment to dis­cuss his com­pany’s pend­ing spec­trum-re­lated li­a­bil­i­ties. He had also flagged con­cerns on the liq­uid­ity crunch in the sec­tor.

This was fol­lowed by a let­ter from the Cel­lu­lar Oper­a­tors As­so­ci­a­tion of In­dia (COAI) to the tele­com depart­ment seek­ing fi­nan­cial re­lief.

“The prob­lem is that they are not able to come to­gether as an in­dus­try and say there is stress. We could have ini­ti­ated some ac­tion if they could come to­gether. If one player is op­pos­ing ev­ery­thing, and two play­ers are say­ing they want re­lief, then what will the gov­ern­ment do?” the of­fi­cial cited above said on con­di­tion of anonymity. Un­der cur­rent rules, at the time of spec­trum pur­chase, tel­cos need to pay the gov­ern­ment some amount. Then, a two-year mora­to­rium be­gins, after which the op­er­a­tor pays the rest over 16 years.

Vodafone Idea had sought in­creas­ing this pe­riod from 16 years to 18 years. But Re­liance Jio has op­posed this pro­posal, and hence there is no agree- ment among oper­a­tors.

Vodafone Idea faces spec­trum li­a­bil­i­ties worth ₹3,000 crore due in March 2019 and an ad­di­tional ₹12,000 crore due in mid-2019-20, Credit Suisse said in a note dated 22 Novem­ber.

The tele­com sec­tor is wit­ness­ing a fierce bat­tle after the en­try of Re­liance Jio in Septem­ber 2016, which has brought down tar­iffs sharply. As a re­sult of the year-long con­sol­i­da­tion, only two other pri­vate firms are left— Bharti Airtel and the merged en­tity of Vodafone In­dia and Idea Cel­lu­lar. Vodafone Idea posted a ₹4,970 crore loss in Septem­ber quar­ter, while Bharti Airtel posted a mea­gre ₹118 crore profit.

Mean­while, the gov­ern­ment has ini­ti­ated ac­tion on the in­dus­try’s de­mand for re­view­ing im­port du­ties on tele­com equip­ment. In Oc­to­ber, it raised ba­sic cus­toms duty on tele­com equip­ment in­clud­ing base sta­tions and op­ti­cal trans­port equip­ment from 10% to 20%.

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