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Govt considering low interests, longer spectrum payment tenure: Telecom Secretary

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NEW DELHI: To revive the stressed telecom sector, the government is considering a two-year holiday from spectrum payments, a longer payment tenure and lower rates of interest, a top official said.

“We're looking at all aspects, reforms could be in the form of number of installments, the rate of interest and spectrum caps,” telecom secretary Anshu Prakash told reporters on Wednesday, on the third day of the India Mobile Congress 2019.

The Department of Telecommunications (DoT) is also examining an industry request for a two-year moratorium on spectrum payments, he added. “…it (reform package) has to go to the government for approval,” he added.

ET reported on October 16 that the DoT was mulling a two-year moratorium on spectrum payments, as part of relief measures for the sector. The department held meetings with industry group Cellular Operators Association of India (COAI), infrastructure providers and companies over the past two months to understand the issues being faced by them, and ‘what can be done more to enable them to actualise their potential’, he said.

“Whatever is decided will be done keeping in mind the realities and what is the situation in terms of number of players, competition, requirement of expansion of network and revenue consideration,” Prakash said.

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INDUSTRY SEEKS RELIEF
Over the first three days of the IMC, largest player Reliance Jio, secondranked Bharti Airtel and Vodafone Idea urged the government to provide urgent relief to a sector that is reportedly battling Rs 7 lakh crore of debt, falling revenue and shrinking profitability due to the ongoing price war.

Of the three, only Jio is making profits. Vodafone Idea — created a year ago due to expanding losses at both Vodafone India and Idea Cellular — has been the worst hit, with many experts saying they were worried about its survival.

Market watchers say India’s telecom sector can ill-afford a third operator exiting the market or going bankrupt as this will hurt all stakeholders, including consumers, equipment vendors and tower companies and lead to huge job losses. The government has now indicated it would step in.

On Monday, telecom minister Ravi Shankar Prasad raised the possibility of relief for the sector, referring to plans that included ‘reforms on spectrum pricing’, comments which were welcomed by the industry.

“By reform, what I would understand is having a package with some parameters which make it good for the telecom industry to achieve its objectives,” Prakash said. When asked specifically on the possibility of reducing spectrum usage charge (SUC) for the upcoming auctions, from 3% currently, the secretary said, “...for this current auction, what will be the SUC is a decision which remains to be taken.”

Two years ago, the government increased the number of instalments for payments of spectrum bought in auctions, to 16 years from 10 years in 2017. It also lowered the rate of interest on delayed payment penalties.

As industry continued to face financial pressure, Prasad wrote to the finance minister a couple of months back, seeking more relief measures. He pointed out that AGR had shrunk to Rs 1.39 lakh crore in FY19 from Rs 1.85 lakh crore in FY17.
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