Cabinet panel to examine relief measures for battered telecom companies

Telecom Service Providers have to cough up dues, penalty and interest worth Rs 92,640 crore within three months, and maybe even Rs 41,000 crore in additional SUC payments.

Published: 30th October 2019 10:05 AM  |   Last Updated: 30th October 2019 10:07 AM   |  A+A-

Telecom companies Bharti Airtel, Vodafone Idea and Reliance Jio.

Telecom companies Bharti Airtel, Vodafone Idea and Reliance Jio.

Express News Service

NEW DELHI: A Committee of Secretaries (CoS) headed by Cabinet Secretary Rajiv Gauba will look into ways to provide relief to the battered telecom industry, including a possible deferment or reduction of dues, sources at the Department of Telecom (DoT) said on Tuesday.

In parallel, the Telecom Regulatory Authority of India (TRAI) is also expected to examine the possibility of laying down a minimum floor price for voice and data services. 

“The government intends to take a holistic view of the entire situation. The CoS is expected to meet shortly and submit their recommendations in a time-bound manner,” said the official.

In its judgment last week, the Supreme Court had ruled in favour of the government’s definition of Adjusted Gross Revenue, based on which license fees and other levies are calculated. With the SC directing Telecom Service Providers to cough up dues, penalty and interest worth Rs 92,640 crore within three months, and a demand for Rs 41,000 crore in additional SUC payments now possible, private sector incumbents Bharti Airtel and Vodafone Idea have sought government support. 

Airtel has even deferred the announcement of its second-quarter results by two weeks in lieu of clarity on the issue. While the Airtel stock has fallen 4.2 per cent since the development, Vodafone Idea’s has plunged nearly 28 per cent. While Bharti Airtel and Vodafone Idea stand to shell out over Rs 40,000 crore each, main rival Reliance Jio has a liability of only Rs 13 crore. 

According to DoT sources, among the measures to be examined by the panel are longstanding demands from the incumbents. “The CoS will look into the demand for deferment of spectrum auction payment due for financial years 2020-21 and 2021-22 in order to ease the cash flow situation of the Industry,” the official said.

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Also on the agenda will be a review of the USOF charge, now at 5 per cent, which TRAI has already recommended reducing it to 3 per cent. “The request for reduction of Spectrum Usage Charges (SUC) may also be examined,” he said. 

The panel’s recommendations will be critical for Vodafone Idea in particular because while analysts have indicated that Bharti Airtel is in a better position to ride out the impact, they say that the absence of government relief may well push Vodafone Idea towards insolvency.

READ HERE | Other telecom companies levying hidden charges on customers: Reliance Jio


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