Cabinet approves Recommendations of Inter-Ministerial Group on Stressed Assets in Telecom Sector

The Union Cabinet chaired by Prime Minister Shri Narendra Modi has approved two key measures in telecom sector to facilitate investments, consolidation in the sector and enhancing ease of doing business. These include restructuring the deferred payment liabilities of spectrum auction of telecom service providers and revising the limit of the cap for spectrum holding for telecom service providers.

Details:

1.Restructuring of Deferred Payment Liabilities of telecom Service providers for spectrum

By giving one-time opportunity to opt for higher number of instalment (max. 16 instalment) apart from currently permitted 10 instalments. The increased instalment is based upon the principle that the Net Present Value (NPV) of the Payment Due is protected as per respective notice inviting application for auction of spectrum from 2012. The total amount received will be higher by Rs. 74446.01 crore till 2034-35.

2.Revision of limits of cap for spectrum holding

Based upon the recommendations of TRAI and Telecom Commission, the Cabinet also approved the revision of limits of cap for spectrum holding as follows:-

The overall spectrum cap is revised from the current limit of 25% to 35%.

The current intra-band cap is removed. Instead, there is a cap of 50% on the combined spectrum holding in the sub-1 GHz bands (700 MHz, 800 MHz and 900 MHz bands).

There will be no cap for individual or combined spectrum holding in above 1 GHz band.

The revised spectrum caps limits may be revisited after Final Acts of World Radiocommunication Conference (WRC) 2019.

TRAI had recommended revision in the existing limits of cap for spectrum holding taking into consideration the technological advancement, efficient use of spectrum, measures to facilitate consolidation etc.

Impact:

With the restructuring of the deferred payment liability, the cash flow for the telecom service providers will increase in the immediate timeframe providing them some relief. Revising the limit for the spectrum cap holding will facilitate consolidation of telecom licensees and may encourage the participation in the future auction.

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