Government may announce relief package for telecom firms as early as mid-April2 min read . Updated: 11 Mar 2020, 03:50 PM IST
- The package may include extension of timeframe to pay dues on adjusted gross revenue (AGR) that the firms owe the government
NEW DELHI: The government is likely to announce a relief package for telecom companies as early as mid-April, which may, among other things, include an extension of the timeframe to pay dues on adjusted gross revenue (AGR) that the firms owe the government, two people aware of the development told Mint on condition of anonymity.
“The contents of the package are being discussed at the highest levels. Some possible interventions could include a plan for staggered payments of AGR dues. The package will take a comprehensive view of the sector keeping in mind the ambitious roll out of 5G," one of the persons said, adding that a mechanism for providing cheap debt capital through a special purpose vehicle for enabling 5G auctions is also being discussed.
The government may also review the base price for the spectrum going forward, the two persons said.
With the Supreme Court’s judgement on repayment of dues hanging over the head of telecom firms and the department of telecommunications (DoT), the government is unlikely to reduce the penalty and interest that that telecom firms owe in AGR dues, the second source said.
The Supreme Court on 24 October had passed a judgement under which it upheld the DoT’s definition of AGR and ordered telecom firms to repay levies based on that definition, as well as interest on the principal amount and the penalty. The liabilities included a principal amount for the 13-year period ended 31 March 2019 and interest up to February 2020.
While the government’s initial estimate for Vodafone Idea’s and Bharti Airtel’s dues were over 50,000 crore and around ₹35,000 crore respectively, a self-assessment by the two firms pegged their dues sharply lower at ₹21,533 crore and ₹18,004 crore.
Vodafone Idea has paid around ₹3,500 crore of its dues while Bharti Airtel has paid the entire amount of ₹18,004 crore it has self-assessed. Reliance Jio is the other telecom firm which has paid all its AGR dues of ₹195 crore.
A staggered payment mechanism is expected to be a great relief measure for the two older telecom firms, Vodafone Idea and Bharti Airtel, which are already grappling with mounting losses in the face of low tariff over the last three and a half years since Reliance Jio introduced its cheap mobile services in September 2016.
The three remaining telecom firms have also been pushing for lowering the reserve price for spectrum in the proposed auction. The government has so far held its ground on the base prices of ₹492 crore per unit of pan-India 3300-3600 MHz spectrum, which are high-capacity airwaves optimal for 5G services, and ₹6,568 crore per unit of 700 MHz spectrum than can be deployed for both 4G and 5G services.
With stretched balance sheets and mounting losses, companies have called the reserve prices as too steep and had sought a review. But the government in December held on to the Telecom Regulatory Authority of India’s recommendations on the base price.