IMG favours more time to telcos on deferred spectrum payment

The inter-ministerial group set up to look into financial woes of telcos may suggest increasing the time for deferred spectrum payment to 16 years as this is among the proposals on which the panel has reached a "consensus", according to multiple officials.
However, on the contentious proposal calling for removal of 50 per cent spectrum cap -- within a particular band -- for mergers and acquisitions, the high-powered panel may consider the option of referring the matter to telecom regulator Trai, two IMG members told PTI.
The drafting of report has begun and will take a day or two, marking the final leg of the report's finalisation. One of the members said the IMG will "try" to meet this week again.

"The IMG will attempt to finalise its report by August 27. There is consensus on various issues, including increasing the time for deferred spectrum payment and shifting from PLR to MCLR on interest and penalty payments with regard to licence fee and spectrum charges," the official said.
The inter-ministerial group, constituted to suggest measures to ease the financial pain in the telecom sector, held its meeting here today.
The final recommendations of the group will be placed before the Telecom Commission and ultimately before the Cabinet. Incidentally, the Telecom Commission is slated to meet on September 1.

The two officials present at today's meeting said that on the spectrum cap proposal, one of the options is seeking Trai's opinion on the matter.

The regulator being a domain expert has the mechanism available, including stakeholder consultation process, to examine the matter at length, they said. "The larger question is what happens to competition if the spectrum cap within a band is done away with," the official added.
The IMG, which comprises senior officials from ministries of finance and communications, last met on August 11 and deliberated on various proposals that can be taken to address the financial difficulties of the industry.
Among the multiple proposals on the table, the panel is learnt to be favouring increasing the period of deferred spectrum payment to 16 years, which, if materialises, will improve the cash flow of telecom companies.

Currently, a portion of spectrum auction amount is taken as upfront payment by the Department of Telecom (DoT) and the balance after a 2-year moratorium is paid out every year in 10 instalments.
The IMG is also considering a proposal to shift from PLR (prime lending rate) to MCLR (marginal cost of funds based lending rate) for interest and penalty payments pertaining to licence fee and spectrum usage charges.
The inter-ministerial group, in June, had held extensive dialogue with all telecom players and large banks on the industry's financial difficulties. With debt burden exceeding over Rs 4.6 lakh crore, the telecom companies are seeking an immediate policy intervention to overcome the crisis.

United against newcomer Reliance Jio, the established telcos have been flagging pressure on profitability and revenue and are pushing for cut in licence fee, spectrum usage charges, besides relaxation in deferred payment norms for the spectrum acquired.
Jio, backed by India's richest person Mukesh Ambani, has ascribed the financial stress in the telecom sector to existing operators like Bharti and Idea running businesses on debt and investing heavily in unrelated sectors, a charge that has outright been dismissed by the large operators.