NEW DELHI:The long awaited telecom sector relief package cleared by the Union Cabinet on Wednesday was greeted with mixed reactions from the industry.While hailing the introduction of the new spectrum caps, apex industry body Cellular Operators Association of India (COAI) pointed out that the restructuring of the spectrum liabilities will extend only “minimal benefits”. “We are grateful to the government for the benefits extended by way of extended payments and enhanced spectrum caps.
The new spectrum caps will facilitate consolidation in the industry- Jio and RCom and Idea & Vodafone,” stated Rajan Mathews, director general, COAI. However, he added that the debt payment extension “will have only a minimal benefit through cash flow relief” and that “total payments will increase”.
“The systemic issues of the industry still remain unaddressed -- like excessive taxes and levies of 30% or more. We hope the Govt will accelerate these relief measures so that the industry can continue meeting the goals of the Prime Minister’s Digital India Vision,” he said. The newly approved measures will give increased time for telecom majors to repay spectrum acquisition costs, from 12 years earlier to 16 years now, while also reducing the interest on overdue payments.
Other sector experts like Deloitte India’s Hemant Joshi were also reserved in their reaction to the restructuring of liabilities. Joshi pointed out that while this would reduce immediate cash outflows to some extent, “the fundamental issue of `7 lakh crore debt, race to the bottom on pricing of mobile services, significant annual servicing costs, declining revenues – need to be addressed comprehensively to make the sector viable.”