Govt to consider 4-year moratorium on AGR dues of telecom players
The government is considering the possibility of a four-year moratorium on adjusted gross revenue (AGR) dues of telecom players and scrapping the spectrum usage charge (SUC) for radio waves acquired in future auctions.
Indications are the government is unlikely to reduce or waive AGR or the interest, penalty, and interest on penalty on existing dues that were upheld by the Supreme Court in its September 2020 judgement.
The deferred payment would have to be made up in the subsequent years.
The relief to the telecom sector could be taken up by the cabinet at its meeting on Wednesday.
There is no immediate relief for the industry on spectrum usage charges (SUC) or bank guarantees. The usage charge may be scrapped only for spectrum acquired in future auctions. There is likely to be no relief on the levy on revenues from existing spectrum.
Meanwhile, banks led by the State Bank of India have called on the Centre to give debt-laden Vodafone Idea more time to clear its tax dues and spectrum fees, two bankers and a government official familiar with the matter said, according to Reuters.
The Supreme Court last year ordered the mobile carrier, a joint venture between the Indian unit of Britain’s Vodafone Group and Aditya Birla Group’s Idea Cellular, to pay just over $8 billion to the government to settle long-standing dues. Vodafone has a stake of about 44 per cent in the company and Aditya Birla owns nearly 27 per cent.
In June, Vodafone Idea's then non-executive chairman Kumar Mangalam Birla warned that without a government reprieve the Indian mobile carrier's “financial situation will drive its operations to an irretrievable point of collapse”.
Vodafone Idea, in its annual report, has flagged the industry's “unsustainable financial duress” and hoped that the government would provide the necessary support to address “all structural issues” faced by the sector.
The total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30, 2021 of VIL stood at Rs 1,91,590 crore, comprising of deferred spectrum payment obligations of Rs 1,06,010 crore and adjusted gross revenue (AGR) liability of Rs 62,180 crore that are due to the government.
Senior SBI officials and representatives of the Indian Banks’ Association (IBA) met finance and telecom department officials this month and proposed an immediate breather on the repayment of spectrum dues.
“We’ve had these discussions with the banks but the issue is the finance ministry needs to be comfortable with the measures,” the government official said.
Apex association COAI recently made a strong pitch for cut in levies, doubling tenure of auctioned radiowave holdings, along with 7-10 year moratorium for spectrum payments to address viability concerns of the sector.
With inputs from Reuters