Telecom Commission defers decision on IMG proposals, to meet in two weeks
The Telecom Commission puts off a decision on the inter-ministerial group’s (IMG) proposals aimed at tackling the financial stress in the telecom sector
New Delhi: The Telecom Commission on Friday put off a decision on measures to provide relief to the stressed industry as it sought more details on some of the suggestions, including deferred spectrum payment liability, from the inter-ministerial group, according to a senior official.
The inter-ministerial group (IMG) is expected to revert with details on the clarifications sought “at the earliest”, and the Telecom Commission will meet again in two weeks on the inter-ministerial group’s proposals aimed at tackling the financial stress in the sector.
The commission, the highest policy-making body in the telecom sector, met in Delhi earlier in the day to consider all the proposals put forth by the IMG.
The official, who did not wish to be named, said the Telecom Commission has sought additional clarifications from the inter-ministerial group (IMG) on two of the major recommendations. These pertain to giving telcos more time to pay for the spectrum they had bought and switching from prime lending rate (PLR) to marginal cost of fund-based lending (MCLR) for penalty payments.
The commission was in-principle broadly agreeable to other suggestions of the IMG, including referring to the Telecom Regulatory Authority of India (Trai) the issue of removal of 50% spectrum cap within a particular radiowave band—for mergers and acquisitions.
“On the issue of spectrum cap, it was decided that it will be referred to Trai. But it is not yet approved per se, as the proposals will get activated when the next Telecom Commission meeting takes place,” the official said, adding that “holistic view” on the entire report will be taken in the next meeting once the clarifications sought, come in. After the commission takes a call, the proposals will be placed before the Union cabinet for approval as these entail changes in the spectrum auction document.
When contacted, mobile industry body the Cellular Operators Association of India’s (COAI) director- general Rajan Mathews said he was hopeful that the commission will consider some other “permanent fixes” such as cut in licence fee and spectrum usage charges. “It is better not to hurry this up and to get it right,” he told PTI.
The IMG—tasked with finding a remedy to the financial difficulties of the telecom sector—had recently recommended that the payments for spectrum be made in 16 instalments (16 years) as against the current practice of 10 years. The IMG had also favoured a cut in interest rates on penalties by switching from PLR based to MCLR based rate, which could provide relief of about two percentage points in the current situation.
IMG, on 31 August, had wrapped up over three months of deliberations that involved extensive dialogue with banks and telecom companies.
The Indian telecom industry, which is in the midst of an intense tariff war, owes a staggering Rs4.6 trillion to various financial institutions and banks. Over the past few months, as IMG held its deliberations, new and old telecom operators continued to blame each other for the sector’s financial difficulties.
Reliance Jio accused incumbent operators of milking the sector using borrowed money while older players—Airtel, Vodafone and Idea—blamed free voice and data offering by the Mukesh Ambani firm for bleeding the sector.
In fact, Vodafone Group chief executive Vittorio Colao in August wrote to telecom minister Manoj Sinha, ruing what he said was “unchecked price competition with services offered below cost for considerable periods of time”.
The Vodafone top honcho, in the letter dated 22 August, had expressed hope that the 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”.
Besides the IMG report, the commission considered various other proposals, including the telecom regulator’s recommendations on free data, where it has decided to seek “clarifications” from Trai on how the entire scheme will be operationalised.
The commission has also approved a proposal pertaining to provision of mobile services to villages not yet covered by the communications network, which will be implemented by Bharti Airtel. It has also given its nod to a proposal relating to implementation of second phase of the BharatNet project that has an outlay of Rs18,792 crore.
The official said it has been decided that in six states—Andhra Pradesh, Jharkhand, Tamil Nadu, Gujarat, Maharashtra and Chhattisgarh—the implementation of the project will be taken up by state-led agencies. In three states—Uttarakhand, Himachal Pradesh and Odisha—the implementation will be done by the Power Grid Corporation of India.