The central government today gave the green light for more telecom sector reforms. This includes raising the green flag for 100 per cent foreign direct investment and imposing a four-year moratorium on the payment of spectrum tariff arrears to telecom companies. This is going to be a huge blow to the telecom companies.
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Prime Minister Narendra Modi today approved 9 structural reforms and 5 process reforms in the telecom sector. One of the most important decisions taken for the telecom sector is rationalized spectrum user charge. The Center today decided to rationalize the spectrum usage charge. Spectrum charges will be levied on telecom companies on the basis of annual usage. It also provides an opportunity to share this spectrum with other organizations. This is going to be a big blow to the telecom sector, which is under severe pressure.
The Cabinet also approved the AGR rationalization, on the other hand, to exempt the spectrum utilization charge (SUC) collected for spectrum in future spectrum auctions. In addition, the Cabinet approved a drastic reduction in BG requirements against license fees (LF) and other similar levies. For future auctions, the central government has made it clear that it is extending the spectrum deadline from 20 to 30 years. Spectrum acquired in a future auction will be allowed to be handed back after 10 years.
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According to rating agency ICRA, telecom companies in India are expected to raise their debt levels by March 2022 to Rs. 4.7 lakh crore. Some telecom companies, such as Bharti Airtel and Vodafone Idea (VI), are currently struggling to repay large sums of money to the government as part of pending AGR arrears. The Center said the two major telcos, including Tata Teleservices, would have to clear their arrears in 10 installments by March 31, 2031.
Currently, telecom giant Vodafone Idea has a total outstanding of Rs 1.92 trillion. Of this, AGR owes Rs 58,000 crore to the government. The remaining amount includes spectrum related arrears and bank loans. In July, the Supreme Court rejected Telco’s request to allow the payment of self-assessed AGR arrears, which was lower than demanded by the Department of Telecom. But now with the Centre’s rationalization decision, the respective institutions have to settle. Industry sources say the decisions taken by the Union Cabinet today will definitely help the telecom sector to survive in dire straits. Opposition parties have stated they will not run in the by-elections.
the union government on today given nod for more telecom reforms including 100 percent fdi and four year moratorium on agr dues etc ..
Story first published: Wednesday, September 15, 2021, 17:57 [IST]