The telecom industry is estimated to have a combined debt of around Rs 4.5 lakh crore
The inter-ministerial group (IMG) looking into the financial stress being faced by telecom operators is reported to have suggested an extended tenure for deferred spectrum payment but has restrained from offering any huge measures in support of the industry.
The report submitted on Thursday will now be placed before Telecom Commission, the highest policy making of the Department of Telecommunications (DoT), on September 8.
The telecom industry is estimated to have a combined debt of around Rs 4.5 lakh crore. With the entry of a new player Reliance Jio, the financial stress in the sector increased substantially as voice calls became free and data charges plunged. Due to this, the existing players – Bharti Airtel, Vodafone India and Idea Cellular – have been demanding some relief package/financial incentives to overcome the financial burden.
Currently, a portion of spectrum auction amount is taken as upfront payment by DoT and the balance after a two-year moratorium is paid out every year in 10 installments.
Sources said telcos could be given 16 years (plus two-year moratorium) instead of 10 years for such payments.
IMG was set up three months back and held various rounds of meetings with operators, banks and financial institutions.
According to sources, IMG has not suggested any cut in licence fee or spectrum usage charges (SUC) levy. Though, it recommended switching from prime lending rate (PLR) to marginal cost of funds based rate (MCLR) for interest and penalty payments with regard to licence fee and SUCs.
The 90-100 page report also did not put any figure to the total relief expected to be accrued by the sector from its various recommendations. The IMG, which comprised senior officials from ministries of finance and telecom, was constituted in mid-May to "examine systemic issues affecting viability and repayment capacity in the telecom sector and furnish recommendations for resolution of stressed assets".
On Wednesday, DoT secretary Aruna Sundararajan had said the recommendations of the IMG will be placed before Telecom Commission at its next meeting.
After approval from Telecom Commission, a Cabinet nod will be required.
Vodafone Group CEO Vittorio Colao recently wrote to the telecom minister Manoj Sinha expressing hope that IMG will recommend "a reduction in the interest rates for deferred spectrum payments to 6.25% in line with the improved macroeconomic trends and an increase in the period of payment for spectrum". He said the deteriorating financial position over the last 9-12 months is due to "unchecked price competition with services offered below cost for considerable periods of time". However, sources said there may not be any tinkering on the interest rates for deferred spectrum payments in the IMG report as that had been the basis of bidding in the last auction.
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