Cabinet approves reforms in telecom sector

The Union Cabinet today approved a number of structural and process reforms in the Telecom sector. These are expected to protect and generate employment opportunities, promote healthy competition, protect interests of consumers, infuse liquidity, encourage investment and reduce regulatory burden on Telecom Service Providers (TSPs).

The cabinet approved 9 structural reforms and 5 process reforms for the telecom sector. Adjusted gross revenue (AGR) definition has been rationalised to exclude non-telecom revenues prospectively and 4-year moratorium on telecom dues was approved as well.

For all the telecom service providers (TSPs), cabinet approved moratorium/deferment of upto 4 years in annual payments of dues arising out of the AGR judgement, by protecting the Net Present Value (NPV) of the due amounts being protected.

Option has been given to the TSPs to pay the interest amount arising due to the said deferment of payment by way of equity.

To encourage investment, 100% foreign direct investment (FDI) under automatic route is permitted in telecom sector. Spectrum user charges have been rationalised. There will be now an annual compounding of rates. Spectrum can now be surrendered, spectrum can also be shared.

In future auctions, tenure of spectrum will be increased to 30 years from 20 currently. Auction calendar has been fixed. Spectrum auctions will be normally held in the last quarter of every financial year. Tower set-up process will now be simplified on the basis of self-approval.

The KYC process for shifting to postpaid from prepaid has ben done away with. All portals will be integrated into DoT portal in ease of doing.

The above will be applicable for all TSPs and will provide relief by easing liquidity and cash flow. This will also help various banks having substantial exposure to the telecom sector, cabinet said in a release.

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