In a breather to telcos, DoT may lighten debt burden by relaxing timelines

The effort would be to firm up measures so that the telecom sector does not go down any further, an official said

The government has decided to initiate consultations on relief measures for the highly stressed telecom sector. This comes in the backdrop of Vodafone Idea and its lenders seeking government intervention to avert a financial crisis. While the Supreme Court, in its hearing on adjusted gross revenue (AGR) scheduled to start on July 19, is expected to give clarity on the quantum of industry dues, the Department of Telecommunications (DoT) is likely to consider relief on certain levies that companies pay to the government.

The Supreme Court had last September allowed telcos 10 years for staggered payment of the AGR money while reaffirming the dues raised by DoT. But earlier this year, Bharti Airtel and Vodafone Idea had moved SC pointing out anomalies in the calculation of the total AGR dues which stood at Rs 43,000 crore for Bharti Airtel and Rs 58,000 crore for Vodafone Idea.

Indicating the nature of relief that are being chalked out for discussions in DoT, a DoT official said relaxing the timeline of payment of certain levies that the companies owe to the government would be among the measures. The licence fee is paid in four quarterly installments, which the department may allow companies to pay annually. This may give a breather to some telcos in lightening their debt burden through the coming quarters. A call may also be taken on deferring spectrum-related installments that telcos pay.  

Another official close to the development said the effort would be to firm up measures so that the telecom sector does not go down any further. While no specific step is being considered for the cash-strapped Voda Idea, he said deliberations were on for the entire telecom sector to prevent it from becoming a duopoly . ‘’The measures would be aimed at benefiting all mobile operators and not just one,’’ the official said.

Till a few years ago, Indian telecom industry had multiple players and attracted  major international telcos. The numbers fell drastically after many telcos had to go out of business after the 2G spectrum allocation scam. Currently, it’s a market of three private players—Reliance Jio, Bharti Airtel and Vodafone Idea.

"Interest of consumers has to be kept in mind when we firm up any kind of relief for the industry. The decision should not hurt the end consumer," a third official said. On the payment of AGR dues, the DoT is likely to hold talks with the law ministry as well as the finance ministry. Vodafone Idea lenders had earlier approached the finance ministry to step in and avert a crisis.

Last month, Vodafone Idea asked the government for a one-year moratorium on payment of spectrum installment of over Rs 8,200 crore, due in April 2022. The company sought help from the telecom department citing its inability to pay the installment due in April next year due to the steep AGR payout. It asked DoT to allow spectrum payment of this tranche in April 2023. It had also mentioned the challenges it was facing in raising funds as investors were wary about the low consumer tariffs and resulting poor health of telcos.

Lack of movement in the floor price regulation by the Telecom Regulatory Authority of India (Trai) was also part of the Vodafone Idea communication to DoT. The regulator has not decided yet on the issue of floor price or minimum threshold price for voice and data for operators. Even though the subject of tariffs is under forbearance, the regulator had indicated there would be consultations with  stakeholders.