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Committee of Secretaries on telecom bailout package disbanded

CoS set up to suggest relief measures for the telecom sector has been ‘disbanded’, a top govt official said.

ET Bureau|
Updated: Nov 26, 2019, 08.46 AM IST
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The panel was constituted shortly after the SC upheld the government's position on including revenue from non-telecommunication businesses in calculating the AGR of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.
New Delhi: The Committee of Secretaries (CoS) set up to suggest relief measures for the telecom sector has been ‘disbanded’, a top government official said, indicating that the two-year moratorium on spectrum payments is possibly all that the sector will get for now.

“They (telcos) have been given a two-year moratorium (from spectrum payment), they’ve got relief of Rs 42,000 crore,” the official said, adding that nothing more should be expected. When asked specifically if the CoS had been disbanded, the official said “yes”.

On whether a new inter-ministerial panel could be constituted to provide relief for the Rs 1.47 lakh crore adjusted gross revenues (AGR) dues, the official said, “No, it is a SC-defined matter”.

This official also appeared to rule out any relief for non-telecom companies including staterun units such as Power Grid, Gail and RailTel that have been affected by the AGR order.

“...why didn’t they (non-telcos) fight (in court), who asked them not to do it? Elementary accounting procedure is that if there are pending dues, then contingent provision should have been kept in books of accounting. It is their statutory obligation,” he said.
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COAI Still Hopeful
The government, on the recommendations of the CoS, last week cleared a two-year moratorium on payments for spectrum bought in auctions, a move aimed at providing cash flow relief to carriers such as Vodafone idea ( Rs23,920 crore) and Bharti Airtel (Rs 11,746 crore).

But the government didn’t reduce the 8% AGR that the telcos pay as licence fees, as was widely expected. Neither did the panel nor the government provide any relief on the AGR-based dues that mobile phone companies face after a recent Supreme Court order. Carriers need to pay the dues in less than three months.

Vodafone Idea and Bharti Airtel, who face combined AGR dues of over Rs 89,000 crore to be paid in less than three months, have filed review petitions seeking a review of penalties and interest on the dues, and questioning some components of the non-core items that the court said should be included while computing AGR of telcos. If forced to pay the whole amounts, the telcos say they have doubts over continuing as going concerns.

“We trust this does not mean the government has ceased to look at the long-term relief and sustainability of the industry. We hope these issues will continue to be looked at and decided upon by DoT through existing channels of decision making,” said Rajan Mathews, director general of Cellular Operators Association of India (COAI). COAI represents all private telecom operators.

Analysts last week said the sector needs more measures.

“While deferment of spectrum auction payment is in line with our expectations, no decision on licence fees reduction is clearly negative…We note that if the Vodafone Idea and Bharti Airtel face challenges in paying the annual spectrum payment of Rs 12,000 crore and Rs 6,000 crore, respectively, then it will be more challenging for them to pay AGR dues of Rs 53,000 crore and Rs 35,600 crore immediately,” Credit Suisse said in a report.

Telecom companies have also asked the government to reduce their total incidence of tax and levies from the present levels of 33%, and reduce spectrum usage charge to 1%, respectively. ET had reported previously that the DoT may ask the finance ministry to refer the pending issue of refunding input tax credits of telecom companies worth Rs 36,000 crore to the GST Council, which the telcos have been asking for as well.


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