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Relief package for telecom companies, other major measures may be announced by the Union Cabinet today

NS central cabinet A relief package for the financially stressed telecom sector is likely to be discussed on Wednesday, sources told News18. Apart from this, news from PLI to Minimum Support Price of Rabi crop can be expected. However, all eyes are on the relief package for the telecom sector, which is all under stress and struggling to come out of the gloom. On the relief front, the telecom sector can expect the government to waive payment of levies, including a one-year moratorium on spectrum installment due in April 2022.

It is expected that with the help of letters of comfort provided by the government, the government will help cash-strapped telcos to raise funds. These telecom companies can explore the innovative methodology of InvITs and REITs, which act like mutual funds. And in terms of raising funds, this letter of comfort will help the telecom companies. Apart from these measures, to provide more relief to telecom companies, the option of allowing companies to pay license fee annually, which is currently paid in four quarterly investments, is being considered. This move of the government, if passed, will be a gamechanger for the telecom sector as it will reduce the debt of companies in the long run.

According to rating agency ICRA, telcos in India are likely to increase their debt levels by Rs 4.7 lakh crore by March 2022, despite tariff hikes. The rating firm also said that the tariff hike is expected to drive revenue growth in FY22, touching 220 ARPU (average revenue per user) in the medium term. ARPU is an important metric to track the performance of telecom operators. This is the amount that the average user contributes to the revenue.

“Lending remains the Achilles heel of the industry. However, there was massive deleveraging in FY20, leading to a reduction in capital expenditure along with a fall in debt to Rs.4.4 lakh crore as on March 31, 2020; and Although the cash flow generation is projected to improve, the debt levels further increase to Rs 4.7 lakh crore by March 31, 2022,” ICRA said in a report.

The report said that the increase in debt levels is due to accrual of AGR (Adjusted Gross Revenue) liabilities in debt in addition to the proposed spectrum auction. According to data released by the Telecom Regulatory Authority of India (TRAI), the industry’s revenue grew 25 per cent year-on-year in the first half of FY21, while ARPU increased from Rs 74 to Rs 90.

Last September, the Supreme Court had allowed telcos 10 years for payment of AGR (adjusted gross revenue) money while confirming the dues raised by the DoT. But earlier this year, Bharti Airtel and Vodafone Idea had moved the court, pointing out discrepancies in the calculation of total AGR dues, which stood at Rs 43,000 crore for Bharti Airtel and Rs 58,000 crore for Vodafone Idea.

In addition to a major relief for telecom companies, the Union Cabinet has approved the Production Linked Incentive (PLI) scheme for man-made fiber segment and technical textiles with a financial outlay of Rs 10,683 crore over five years to boost domestic manufacturing and exports. likely to be approved. area, an official said. The cabinet had earlier approved PLI schemes in 13 key sectors to increase India’s manufacturing capacity and exports.

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