Tatsat Chronicle Magazine

Cabinet approves 4-year moratorium on payment of all govt dues by telecoms

September 16, 2021
telecom relief package

Telecom Relief Package: The Union Cabinet on Wednesday approved a four-year moratoriumon payment of spectrum dues by telecom companies as part of a relief package for the struggling sector

The move is aimed at providing relief to incumbent telcos such as Vodafone-Idea and Bharti Airtel which have to pay thousands of crores in un-provisioned past statutory dues.

The step comes weeks after billionaire Kumar Mangalam Birla resigned as chairman of Vodafone Idea on August 4.

Speaking on the decisions, Union Communications minister Ashwini Vaishnaw said that the government had decided to rationalise the definition of Adjusted Gross Revenue and added that non-telecom revenue under AGR would be removed.

AGR refers to revenues that are considered for payment of statutory dues.

“PM Modi has taken a bold decision over AGR to rationalise its definition. All non-telecom revenue will be taken out of AGR. There was a regime of heavy interest, penalty and interest on penalty on payment of license fees, spectrum user charges and all kinds of charges. It has now been rationalised. Annual compounding (of interest) will be done instead of monthly compounding. A reasonable interest rate of MCLR + 2% interest rate has been offered and the penalty has been completely scrapped. This will pave way for large-scale investments in the telecom sector. Investment means employment – more the investment, more the employment,” the minister said at a press briefing in New Delhi.

“For future auctions, duration of the spectrum will be 30 years instead of 20 years. Also, if someone takes spectrum and business conditions/technology changes then after a lock-in period of 10 years it can be surrendered by paying spectrum charge. Spectrum sharing is also being completely allowed, it has been made completely free,” added Vaishnaw.

Applauding the employees of the telecom sector who contributed during the  Covid-19  pandemic amid the sudden rise of telecom traffic, Vaishnaw said the Cabinet had approved nine structural reformsin the sector.

The Telecom Minister also announced that the Cabinet has allowed100 per cent FDI in the telecom sector with safeguards through the automatic route.