NS cabinet meeting chaired by the prime minister Narendra Modi On Wednesday, 9 structural reforms and 5 process reforms were approved for the telecom sector. among the raft of decisions taken for telecom sectorOne of the most important decisions is spectrum user charges which have been rationalised. As per the decision passed by the cabinet, spectrum usage charges have been rationalised; It will now be charged on annual compounding of rates. Moreover, now spectrum can be surrendered and spectrum can also be shared. This comes as a big relief to the telecom sector which is battling heavy stress. The cabinet approved 100% FDI in the telecom sector under the automatic route to attract investment.
“The reforms are deep and widespread. They are structural. These reforms will bring about change today, tomorrow and in the future. I do not like to put a number on the package as it is revenue-neutral for the government,” said Telecom Minister Ashwini Vaishnav.
Among the major reforms, rationalization of AGR, and waiver of spectrum usage charges (SUC) for spectrum acquired in future spectrum auctions are the most important decisions taken by the cabinet. Besides this, the cabinet also approved drastic reduction in BG requirements against License Fee (LF) and other similar levies. The government clarified that the duration of spectrum for future auctions would be increased from 20 to 30 years. However, for spectrum acquired in future auctions, surrender of spectrum is allowed after 10 years.
“If someone took spectrum and the business conditions and technology changed, the spectrum can also be surrendered, after paying a defined surrender fee, after a lock-in period of ten years. It’s a huge flexibility given to the industry.”
According to rating agency ICRA, the debt level of telecom companies in India is likely to increase by Rs 4.7 lakh crore by March 2022 despite tariff hike. Some telecom firms such as Bharti Airtel and Vodafone Idea (VI) are under pressure as they have to pay a huge amount to the government as part of the pending AGR dues. Two major telecom companies along with Tata Teleservices have to clear their dues in 10 installments by March 31, 2031.
“The savings in cash flow will give a boost to the telecom sector and pave the way for 5G auctions in India. Piyush Vaish, Partner and Telecom Sector Leader, Deloitte India, said, “The government is clearly committed to fast rolling out next generation services in India through a self-declaration route for 100% FDI and roll out of towers.
At present, telecom company Vodafone Idea has a total liability of Rs 1.92 lakh crore. Out of this, it is outstanding ₹58,000 crore as AGR dues to the government. The balance amount includes spectrum-related dues and bank loans. In July, the Supreme Court had dismissed the telco’s plea to allow payment of self-assessed AGR dues, which are lower than those demanded by the DoT.
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