Inter-ministerial group on telecom stress may meet on Friday

Officials familiar said the group is debating easing of spectrum cap within a particular band

The inter-ministerial group (IMG) constituted to suggest measures to ease the financial stress in the telecom sector is likely to meet on Friday, according to two officials.

The officials familiar with the working of the group said while there is uniformity of views among members on some of the issues, one of the proposals that is still being debated is easing of spectrum cap within a particular band (currently pegged at 50 per cent) in case of mergers and acquisitions.

"The question is that in case the spectrum cap within a band is relaxed, a company can have [an] unlimited holding in that band. So what happens to competition? No view has been taken on the issue yet," one of the officials said.

Both the officials said the IMG is likely to meet on Friday to discuss multiple proposals.

The group last met on August 11 and deliberated on various measures that can be taken to address the financial woes of the industry.

The inter-ministerial panel is learnt to be favourably considering certain measures, including increasing period of deferred spectrum payment to 16 years, a proposal that would improve the cash flow of telecom companies.

The final recommendations of the group will be placed before the Telecom Commission and ultimately before the Cabinet.

At the last meeting, some members felt that large-scale policy intervention may not be required as green shoots have become visible in the sector during the first quarter.

Currently, a portion of spectrum auction amount is taken as upfront payment by the Department of Telecom (DoT) and the balance after a two-year moratorium is paid out every year in 10 instalments.

The telcos could be given 16 years instead of 10 years for such deferred spectrum payment, according to an official in the Telecom Department.

The other proposals being discussed include convergence between the DoT and the Reserve Bank of India (RBI) guidelines on the issue of allowing spectrum as collateral.

The IMG is also considering a proposal to shift from prime lending rate (PLR) to marginal cost of funds based lending rate (MCLR) for interest and penalty payments, pertaining to licence fee and spectrum usage charges.

The inter-ministerial group, in June, had held extensive discussions with all telecom players and large banks on the industry's financial difficulties.

Established telecom operators have been flagging pressure on profitability and revenue, and have blamed competition intensified by the entry of Reliance Jio for their woes.

The industry has a debt of over Rs 4.6 lakh crore and has been seeking sops to overcome the crisis.