How govt plans to untangle the telecom mess

Analysts have pointed out that with the dues arising out of the SC judgment there could soon be only two private telcos in the country, and not three - Reliance Jio, Bharti Airtel and Vodafone Idea - as now.

Illustration: Dominic Xavier/Rediff.com

The government has set up a committee of secretaries (CoS) under Cabinet Secretary Rajiv Gauba to suggest measures to mitigate financial stress in the telecom sector, which is looking at a payout of Rs 1.33 trillion to clear statutory dues.

The Supreme Court (SC) had on October 24 agreed with the Department of Telecom’s (DoT’s) definition of adjusted gross revenue (AGR), asking the telcos to pay dues and interest within three months.

The telcos had subsequently appealed to the government to reduce the amount and also extend the deadline or provide a moratorium.

The CoS will comprise representatives from the ministries of finance, law and telecom.

Sources in the government said it will consider issues such as deferment of spectrum auction for two years and reduction in spectrum usage charges, and take a relook at the Universal Service Obligation Fund (USOF) charges.

For spectrum auction charges, telcos will have to fork out Rs 49,040 crore in the next two years.

While the Telecom Regulatory Authority of India (Trai) has suggested that USOF charges - paid to make telcos take their services to rural areas - be 3 per cent, and not 5 per cent.

Sources said though the CoS is not mandated to look into it, the panel might consider the issues of the stress arising out of the SC judgment.

The total debt of telcos at present is Rs 4 trillion.

In 2018-19 (FY19), they made a loss of Rs 36,033 crore (this does not include public sector company Bharat Sanchar Nigam).

Analysts have pointed out that with the dues arising out of the SC judgment there could soon be only two private telcos in the country, and not three - Reliance Jio, Bharti Airtel and Vodafone Idea - as now.

Telecom firms have welcomed the panel and asked for two-pronged relief.

Rajan Matthew, director general, Cellular Operators Association of India, said: “Time is of essence because of the SC judgment. So, the panel can give an immediate relief package to ensure financial viability of operators.

"They can also prove longer-term relief to ensure financial viability of the sector.”

Telecom operators have already approached the DoT, seeking relief.

On Monday, Bharti Airtel chairman Sunil Mittal met Telecom Minister Ravi Shankar Prasad and telecom secretary Anshu Prakash.

Vodafone Idea chairman Kumar Mangalam Birla is also expected to do so.

Telcos have suggested that both sides - the government and telcos - enter a bipartite agreement about the amount to be paid and a plan on how it can be paid, and seek the SC’s for permission for this.

The alternative is for telcos to pay the dues upfront but with a staggered payment schedule which is more than three months.

In return the DoT would provide relief in the future by reducing the license fee currently at  8 per cent of the AGR . Matthew said, “The SC has entitled the government that these dues have to be paid within three months.

"However, what we are seeking is that the telcos and the DoT could come to an agreement, under which the latter would reduce the amount so that we pay only the disputed dues without the high penalty and interest.

"It could also provide us with more time to pay.

"We can then go to the SC that we have reached an agreement and seek permission.”

He added that the other possibility was the government reduces the licence fee so that telcos get relief in the future.

However even here, the need was for an extension of three months to pay.

Telcos are also closely looking at the option of a “review petition”.

But sources said they feel they have little chance to get relief through this method.