Telecom sector woes: IMG to give policy proposals to improve financials

IMG was set up to examine issues affecting viability and repayment capacity of telecom companies

The inter-ministerial group (IMG) looking into financial difficulties of the telecom sector is expected to submit its policy prescription to the Telecom Commission next month.

"The (IMG) recommendations will be submitted within a month," an official told PTI.

The IMG was set up on May 16 to examine issues that are affecting viability and repayment capacity of telecom companies. The group has to furnish recommendations for resolution of stressed assets, policy reforms and strategic interventions for the telecom sector in three months.

"Now, no external meetings are required by the IMG. There will be only internal meetings and examinations by various divisions of the Department of Telecom. The recommendations will be sent to the Cabinet for final approval after Telecom Commission examines it and firms up a view," the official said.

Another official pointed out that there are many issues in the sector on which the government cannot do much as they are sub judice like definition of adjusted gross revenue (earning of companies from telecom services only) and many others that may require a bold decision at the political level, especially in line with the suggestion made by the Economic Survey 2016-17.

According to the Survey, policymaking in certain areas like telecom and banking has been severely constrained by "abundant caution in bureaucratic decision-making".

It added that senior managers in public banks are wary of becoming the target of the so-called '4 Cs' - courts, CVC (Central Vigilance Commission), CBI (Central Bureau of Investigation) and CAG (Comptroller and Auditor General).

The Supreme Court in February 2012 had quashed 122 telecom licences issued in 2008 and asked the government to allocate spectrum for mobile services through auction.

The CAG had said the spectrum allocated administratively in 2008 had led to a notional loss of Rs 1.76 lakh crore to the national exchequer.

"In telecommunications, the judicially imposed requirement for transparency and auctioning while responding importantly and appropriately to the previous experience of corruption has created a public policy dilemma," the survey has noted.

It said that in some cases, it may be socially optimal to sell spectrum at lower than auction prices because of the sizeable externalities stemming from increased spread of telecommunications services.

"But the understandable distrust of discretion means that methods other than auctions could be perceived as favouring particular parties," the survey stated further.

Telecom bigwigs, including Sunil Bharti Mittal and Anil Ambani, in their meeting with the communications minister have requested easing of norms for payment of spectrum acquired by their firms during auction.

The sector, with a cumulative debt of Rs 4.6 lakh crore, has approached the government for reduction of levies like licence fee, spectrum usage charge and the Goods and Services Tax.