Telecom industry body writes to govt seeking breather for crisis-hit sector

COAI's letter comes at a time when Vodafone Idea has reportedly made it clear to the govt that it won't be able to pay court mandated AGR dues in their entirety, unless a bailout is extended

Cellular Operators’ Association of India (COAI), a body representing the telecom industry, has urged the government to provide relief to improve the health of the telecom sector which is reeling under the adjusted gross revenue crisis.

The COAI in a letter to Telecom Secretary Anshu Prakash, asked for easier terms for payment of statutory dues by telcos, including extension of loans at lower interest rates to cover AGR liabilities, and also fast implementation of floor prices to rescue the troubled sector.

With the telecom industry plunging into a deep and unprecedented crisis, the association has raised an alarm over banks' unwillingness to take any risks with regard to the sector, and asserted the "need to give a clear message to banks that Government is there to support the sector" in their letter.

"Banks are currently unwilling to take any risk with reference to the telecom sector and are constantly asking telecom service providers to reduce their exposures by refusing to issue new bank guarantees or even to renew bank guarantees," COAI Director General, Rajan Mathews said in the letter.

the COAI said that the requirement of financial bank guarantees for securing licence fee payments should be done away with. In case Telecom Department is of the view that financial bank guarantees are needed, the same should be reduced to one quarter of licence fee.

The association also sought an immediate cut in the licence fee levy to 3 per cent from 8 per cent and a reduction in spectrum usage charges.

Citing India's low average revenue per user (ARPU) compared to markets like China, Brazil and Russia, it further said data prices in India are a fraction of those in markets are US, China, Germany, France and others.

"Therefore floor pricing is imperative to ensure the sector is sustainable and in a position to bear the deferred spectrum and AGR dues, while continuing to invest in world class networks," COAI said.

The COAI's letter comes at a timewhen Vodafone Idea has reportedly made it clear to the government that it won't be able to pay court mandated AGR dues in their entirety, unless a bailout is extended immediately.

In all, 15 telecom entities owe the government Rs 1.47 trillion in unpaid statutory dues -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.

Of the estimated dues that include interest and penalty for late payments, Airtel and Vodafone Idea account for about 60 per cent.

These dues arose after the Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

The Supreme Court, earlier this month, rejected a plea by mobile carriers such as Bharti Airtel and Vodafone Idea for extension in the payment schedule and asked companies to deposit their past dues for spectrum and licences.