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Business News/ Industry / Telecom/  Telcos likely to get relief on AGR dues, spectrum charges in April

Telcos likely to get relief on AGR dues, spectrum charges in April

The package may include extension of deadline for payment of AGR dues and reduction in 5G spectrum price
  • A mechanism for providing cheap debt capital through a special purpose vehicle for enabling 5G auctions is also being discussed
  • Photo: MintPremium
    Photo: Mint

    NEW DELHI : Telecom companies in India are set to receive a financial boost with the government preparing a relief package for the sector saddled with heavy debt and mounting losses, following years of intense competition and low tariffs.

    The package is expected to be announced in April and will contain measures such as extension of the deadline for paying adjusted gross revenues (AGR) dues as well as a reduction in base prices for 5G spectrum auction, two people familiar with the matter said 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," one of the persons said. “The package will take a comprehensive view of the sector keeping in mind the ambitious roll-out of 5G," the person said.

    A mechanism for providing cheap debt capital through a special purpose vehicle for enabling 5G auctions is also being discussed, the person added.

    The government may also review the base price for spectrum going forward, both the people said, which could address a key worry of telecom firms who have complained that these prices are too high.

    Financial boost
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    Financial boost

    The relief package, if implemented, would be a lifeline to telecom companies, especially Vodafone Idea Ltd. The telco’s situation is so dire that chairman Kumar Mangalam Birla had warned last year it will have to shut shop without relief from the government.

    With the Supreme Court order to pay dues hanging over the telecom operators and the department of telecommunications (DoT), the government is unlikely to reduce the penalty and interest owed by telecom firms in AGR dues, the second person said.

    The Supreme Court had on 24 October upheld the DoT’s definition of AGR and ordered telecom firms to pay levies based on that definition, along with interest on the principal amount and penalty. The liabilities included a principal amount for the 13-year period ended 31 March 2019 and interest up to February 2020.

    The apex court also asked managing directors of the telecom companies to appear in person before the bench at the next hearing on 17 March if the dues are not cleared by then.

    While the government’s initial estimates for Vodafone Idea’s and Bharti Airtel’s dues were more than 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 13,004 crore respectively. Bharti Airtel paid 5,000 crore extra as an ad-hoc payment to cover differences that may arise with DoT. Vodafone Idea has paid around 3,500 crore while Bharti Airtel has cleared its entire amount of 18,004 crore it has self-assessed. Reliance Jio is the other telecom firm which has paid its AGR dues of 195 crore.

    Telcos have been pushing the government to cut the base price for spectrum, but the government in December held on to the regulator’s recommendations, setting it at 492 crore per unit of pan-India 3,300-3,600MHz spectrum, and 6,568 crore per unit of 700MHz spectrum.

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    Updated: 11 Mar 2020, 11:39 PM IST
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