Government Defers Spectrum Payments giving telecom giants a major sigh of relief
[ by Kavita Krishnan ]In a major relief to the stressed telecom sector, the Cabinet Committee on Economic Affairs has approved the plan to defer spectrum payment to the tune of Rs. 1.47 lakh crore till 2022. The moratorium will be for two years beginning April 2020. Finance Minister Nirmala Sitharaman had offered assurance to the companies, saying the government wanted to ensure that no...
In a major relief to the stressed telecom sector, the Cabinet Committee on Economic Affairs has approved the plan to defer spectrum payment to the tune of Rs. 1.47 lakh crore till 2022. The moratorium will be for two years beginning April 2020. Finance Minister Nirmala Sitharaman had offered assurance to the companies, saying the government wanted to ensure that no company shuts operations due to financial unsustainability.
The telecom sector was under huge pressure to pay spectrum dues after the Supreme Court judgment which ordered the telecom companies to pay up their dues within three months, triggering panic among the service providers. The ruling was over years-long dispute about how the fees should be calculated, leaving the amounts due to accumulate over the years.
Nirmala Sitharaman said that the Telecom Service Providers (TSPs) opting for deferment will have to provide bank guarantee for the revised payable amount. She further said that the deferral amounts will be equally spread over the remaining installments without any increase in the time period specified for making the payments. Interest, as stipulated during the spectrum auction, will be charged so that the net present value (NPV) of the payable amount is protected.
Telecom operators owe the government nearly Rs. 1.47 lakh crore in license fee (LF) and spectrum usage charges, the communications ministry told the Parliament on Wednesday.
Both the telecom giants – Vodafone and Bharati Airtel had posted massive losses and Vodafone said that unless the government offered relief, or a legal remedy was found, it would not be able to continue its business in India. Vodafone Idea posted a loss of Rs. 50,921 crore, the highest-ever quarterly loss by any corporate in India whereas Airtel’s losses were posted to be Rs. 23,045 crore.
According to the British media, Vodafone CEO Nick Read said the company won’t infuse more capital for its business in India unless the authorities make provisions enabling it to compete with domestic players like Mukesh Ambani’s Reliance Jio.