NEW DELHI :
The Union cabinet on Wednesday gave beleaguered telecom operators Bharti Airtel Ltd and Vodafone Idea Ltd a breather by allowing them to defer payments for spectrum purchases by up to two years.
The move to defer payments for 2020-21 and 2021-22 will be a relief to these companies while helping Reliance Jio Infocomm Ltd as well. It follows the Supreme Court’s 24 October ruling that directed older telecom firms to pay at least ₹92,000 crore in past dues to the government within three months.
“Department of Telecommunication will give an option to the Telecom Service Providers (TSPs) to defer payment of the spectrum auction instalments due for 2020-21 & 2021-22, either for one or both years. These deferred amounts bill be spread equally in the remaining instalments to be paid by TSPs. Interest as stipulated while auctioning of the concerned spectrum will however be charged so that NPV (net present value) is protected," the government said.
Vodafone Idea and Bharti Airtel suffered record losses in the September quarter, hit by the apex court’s ruling that upheld the government’s broader definition of revenue on which it calculates levies on telecom operators. Bundling of unlimited free voice services with very cheap data prices by Reliance Jio had forced Bharti Airtel and Vodafone Idea to match tariffs, leading to an erosion in earnings.
“The decision for deferring spectrum payment instalments for two years will be implemented within a fortnight. Amendment to the license shall be issued expeditiously with the approval of hon’ble minister of communications," the government statement added.
This also comes at a time when Bharti Airtel, Vodafone Idea and Reliance Jio are raising tariffs, indicating that a three-year-long price war that led to an unprecedented industry consolidation is nearing an end.
“Deferment of spectrum auction instalments will ease the cash outflow of the stressed TSPs and facilitate payment of statutory liabilities and interest on bank loans. Continued operation by TSPs will give a fillip to employment and economic growth. Improved financial health of TSPs will facilitate maintenance of quality of services to consumer," the statement said.