Monday, 30th October 2017

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Telecom bailout panel set up

On the agenda: Reducing spectrum charges

By TT Bureau in New Delhi
  • Published 30.10.19, 12:55 AM
  • Updated 30.10.19, 12:55 AM
  • 2 mins read
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A Committee of Secretaries will work out the financial bailout package for the operators that may include the lowering of spectrum charges as well as ending the era of free mobile phone calls and dirt cheap data (Shutterstock)

The Centre has set up a high-level panel to prepare a bailout package for the telecom sector, dealt a hammer blow last week by a Supreme Court order demanding a massive payout of unpaid dues.

A Committee of Secretaries will work out the financial bailout package for the operators that may include the lowering of spectrum charges as well as ending the era of free mobile phone calls and dirt cheap data.

The Committee of Secretaries, headed by Cabinet secretary Rajiv Gauba, has been asked to examine “all aspects” of “financial stress” faced by service providers such as Bharti Airtel and Vodafone-Idea Ltd and suggest measures to mitigate them, sources in the Department of Telecommunications (DoT) said.

The panel, which will comprise secretaries to the ministries of finance, law, and telecom, has been asked to look at the demands of the operators for the deferment of payments they had promised for the spectrum won through auction as well as consider lowering airwave usage charge.

It has also been asked to consider lowering the obligation of the operators for providing 5 per cent of their annual revenues for the Universal Service Obligation Fund, they said.

In parallel, sector regulator Trai is expected to examine prescribing minimum charge for voice and data services, which according to old telecom operators will ensure long term viability and robust financial health of the sector, they said.

The committee of secretaries, which is expected to meet shortly and submit recommendations in a time-bound manner, will consider the demand of the operators to defer spectrum auction payment for 2020-21 and 2021-22 in order to ease cash flow and lower USOF charge to 3 per cent.

While the older operators such as Bharti Airtel and Vodafone-Idea have been talking of financial stress ever since they faced intense competition from free voice and dirt-cheap data from newcomer Reliance Jio, the matter has assumed greater importance after the October 24 judgment of the Supreme Court.

The top court had upheld the government’s position on including revenue from non-telecommunication businesses in calculating the annual adjusted gross revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

Following the order, Airtel, Vodafone-Idea and other telecom operators may have to pay the government a whopping Rs 1.42 lakh crore within three months.

Cellular Operators’ Association of India (COAI) on Tuesday urged the panel to first address the AGR issue within 60 days, given the “urgency of situation”. COAI director-general Rajan Mathews said it wanted the decision making to be bifurcated, with AGR taken up first.