COAI Urges Government To Give Telecom Firms Longer AGR Repayment Time, 2-Year Moratorium, Lower Interest Rate

The mobile phone service provider industry has urged the government to help telecom companies come out of their debt crisis aggravated by the Supreme Court’s recent adjusted gross revenue (AGR) judgment, by giving them a two-year moratorium, lower interest and longer repayment time.

“It will need a 20% increase in Average Revenue Per User (ARPU) to get telecom companies on a better financial footing. To achieve this, there will be an immediate need to restructure the debt to Government with a 2 year moratorium, lower interest and a longer repayment time. Also, the government needs to eliminate or redefine AGR prospectively, reduce License Fees (LF) and Spectrum Usage Charges (SUC) to 3% as well as 1% respectively. GST rate needs to be brought down to 5% and GST should be removed from all government payments for debt repayment, interest, LF and SUC,” COAI Director General Rajan Mathews has stated.

Incidentally, the July-September quarter (Q2) has dealt a financial body blow to the Indian telecom sector after the Supreme Court’s AGR order, already reeling under a bruising tariff war and heavy spectrum dues payment schedules.

The Supreme Court ruling has resulted in a Rs 92,000-crore liability for India's telecom sector, Airtel and Vodafone Idea being the worst hit, while many others have shut operations since then.

Bharti Airtel and Vodafone Idea, India's second- and third-biggest telecom service providers, respectively, ended up with unprecedented losses, largely a result of the two firms setting aside cash to pay AGR dues to the government.

Vodafone Idea's losses ballooned to Rs 50,922 crore in the three months, from Rs 4,874 crore in the year-ago period. Bharti Airtel's figure stood at Rs 23,044 crore the biggest in its 24-year history. The company had earned profits of Rs 118 crore in the year-ago period.

Both telecom companies have already stated that unless government gives them relief package, they would find it extremely difficult to remain going concerns.

A central government Centre appointed secretaries panel which is looking into possible bailout packages in terms of lower rate of interest and moratoriums, is yet to take any final decision on it.

However, recently Union Finance Minister Nirmala Sitharaman said that the government does not want any telecom company to shut down.