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Regular-article-logo Wednesday, 17 April 2024

Telecom relief options on table

Survival call to clear arrears

Our Special Correspondent New Delhi Published 19.02.20, 07:24 PM
The only thing the government needs to do is to focus on how to ensure sustainability of the sector: Sunil Bharti Mittal

The only thing the government needs to do is to focus on how to ensure sustainability of the sector: Sunil Bharti Mittal Wikipedia

A bailout package in telecom appears likely with the top bosses of the AGR dues-stung operators holding talks with government officals on Wednesday to extricate themselves from the tangle and prevent a duopoly in the sector — but without incurring the wrath of the Supreme Court.

Bharti Airtel chairman Sunil Bharti Mittal and Vodafone Idea chairman Kumar Mangalam Birla met finance minister Nirmala Sitharaman and other senior officials of the ministry to apprise them of the present stressed state of affairs in the sector arising out of the huge dues on adjusted gross revenue.

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It is learnt that Mittal and Birla have sought relief for sustenance.

The hectic meetings come amid fears the telecom department may encash bank guarantees that could lead to job losses, bad asset problems and a private sector duopoly.

Vodafone Idea finds itself in a precarious position following the Supreme Court order and Birla had earlier indicated the operator would have to shut shop unless the government comes out with some kind of relief measures.

The officials of the department of telecom and the finance ministry also held talks to discuss options before the government following the court order of October 24. The Prime Minister’s Office is also in the loop as any decision has to be taken with a wider consensus.

Emerging from the North Block after meeting top finance ministry officials, Mittal told reporters the issue of pending dues arising out of the Supreme Court ruling on AGR was not discussed.

He said the sector was under stress for the last three-and-a-half years and the government should focus on its sustainability.

The telecom industry, he said, was vital to the nation and the digital agenda of the government. “The only thing government needs to do is to focus on how to ensure sustainability of the sector,” he said.

He said Airtel has already announced its plans to pay the dues that arose from the apex court ruling. The company has paid Rs 10,000 crore out of its estimated liability of over Rs 35,000 crore.

Mittal, who had first met the telecom secretary prior to going to the finance ministry, said the company was calculating its liability.

Birla, who had met the telecom secretary on Tuesday, also met finance ministry officials. It is not clear if they met the officials together, or separately. He also refused to divulge what transpired at the meeting.

Sources said some of the options being considered by the government for the operators include setting up of a fund, which can extend loan to telecom firms with soft interest, increasing the timeline of repayment of AGR dues and spectrum dues and taking the ordinance route to provide relief to waive off penalties and interest.

There are talks of the government issuing an ordinance to redefine AGR to provide relief to non-telecom players such as GAIL India, Oil India. However, this could be challenged by the mobile operators for action in a partisan manner

Sources said any relief would have to be for the sector and cannot be company specific as that would open up allegations of favouritism.

They also stated that the collapse of Vodafone Idea will have wide implications across sectors, jobs, the wider economy and global perception of India.

Subhash Chandra Garg, former finance secretary at the department of economic affairs, in his blog has suggested that the government could “offer a one-time settlement scheme to the telecom companies (both operating and under resolution) to pay the principal due amount as per the AGR definition as contained in the licencing agreements and waive the penal interest and penalties.”

“Alternatively, appoint a Board for Vodafone-Idea by ousting current Board on the lines of action taken in case of ILFS and DHFL and secure a moratorium of some time on servicing of loans and government dues,” he added.

While Airtel owes nearly Rs 35,586 crore, including licence fee and spectrum usage charges to the government, Vodafone Idea is staring at dues worth Rs 53,000 crore, which includes up to Rs 24,729 crore of spectrum dues and another Rs 28,309 crore in licence fee. Tata Teleservices owes around Rs 13,800 crore, BSNL Rs 4,989 crore and MTNL Rs 3,122 crore.

Of Rs 1.47 lakh crore, around Rs 1.13 lakh crore is likely to be recovered, as other companies, which are liable to pay AGR dues, have shut down their businesses. Reliance Communications and Aircel are going through insolvency proceedings. Of the total demand raised, Bharti Airtel, Vodafone Idea and Tata Group have made part payment of about Rs 10,000 crore, Rs 2,500 crore and Rs 2,197 crore, respectively. The next hearing of the case is listed for March 17.

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