Telecom stress: Ministerial group may give more time for cos to pay for spectrum

New Delhi: The government is considering giving telecom companies more time to pay for the spectrum they bought, in a bid to give relief to the sector reeling under massive debt and profitability issues, according to an official source. The finance minister held discussions on the relief measures being proposed for the sector with his officials as well as the telecom secretary last week. When contacted, Aruna Sundararajan, Secretary, Department of Telecom (DoT), told PTI: “I met the finance minister and we had a preliminary discussion. The recommendations are yet to be finalised.” Sundararajan declined to comment further on the matter. A telecom ministry senior official, however, said the inter-ministerial group (IMG) constituted to look at measures to mitigate the financial stress of the sector is favourably considering relaxing the period of deferred spectrum payment to 16 years. This, said the official, will improve the cash flow of telecom companies. At present, a portion of spectrum auction amount is taken as upfront payment by DoT, and the rest after a two-year moratorium is paid out every year in 10 instalments. “Relaxing the payment period to 16 years could increase telcos’ cash flows by Rs 55,000 crore,” said an industry official who did not wish to be named. [caption id=“attachment_2414198” align=“alignleft” width=“380”]  Reuters[/caption] Other proposals being actively considered include shifting from PLR (over 13 percent) to MCLR (8 percent) for interest on deferred payments, and convergence between DoT guidelines and Reserve Bank of India (RBI) guidelines on the issue of allowing spectrum as a collateral. “The inter-ministerial group is still exchanging ideas, and the date of the next meeting is yet to be finalised,” the DoT official said. The IMG, last month, had held extensive dialogue with all telecom players as well as large banks to discuss the industry’s financial difficulties and suggest measures to ease the situation. Telecom Minister Manoj Sinha has promised that the government will act swiftly on the recommendations of the inter-ministerial panel, and that report of the panel is expected soon. United against Reliance Jio, three established operators Airtel, Vodafone and Idea Cellular have cited Rs 4.6 lakh crore of cumulative industry debt to demand raising of the call termination charges from the current 14 paise per minute as well as reduction in licence fee, spectrum usage charges and GST, besides relaxation in deferred payment norms for the spectrum acquired. Jio, backed by 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 established operators.