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Relief to telecom sector: Cabinet gives nod to a two-year moratorium on spectrum payments

The deferred amounts to be paid by telcos will be without increase in the time period, the FM said.

, ET Bureau|
Updated: Nov 22, 2019, 11.29 AM IST
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Major relief for AGR hit telcos, Govt defers spectrum payments for FY21, FY22
Major relief for AGR hit telcos, Govt defers spectrum payments for FY21, FY22
The Narendra Modi-headed Cabinet on Wednesday approved the recommendation of the Committee of Secretaries (CoS) on the relief to the stressed telecom sector, and allowed telcos a 2-year moratorium on spectrum-related dues.

"In view of the current financial stress faced by major telecom service providers and in pursuant of the recommendations by Committee of Secretaries, it is decided to defer receipts of spectrum auction installments due from the telecom service providers from the years 2020-21 and 2021-2022," Finance Minister Nirmala Sitharaman Wednesday said.

The deferred amounts, according to Sitharaman would be equally spread over the remaining installments.

"These deferred amounts bill be spread equally in the remaining installments to be paid by telecom companies. Interest, as stipulated while auctioning the concerned spectrum, will, however, be charged so that NPV is protected, the government in a statement said.

However, telecom companies opting for a two-year deferred payment would have to furnish a bank guarantee.

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Deferment of spectrum auction installments would ease the cash outflow of the stressed telcos and facilitate payment of statutory liabilities and interest on bank loans.

Continued operation by telecom service providers, according to the statement, would give a fillip to employment and economic growth. In addition, the improved financial health of service operators would facilitate the maintenance of quality of services to the consumer.

Following the Rs 1 lakh crore worth of Q2 loss by telcos, the Centre had formed a Committee of Secretaries to look into relief package to the ailing sector.

The recent adverse Supreme Court ruling mandating the telecom companies to pay up outstanding to the Department of Telecommunications (DoT) within three months, coupled with the existing cumulative debt of Rs 7.5 lakh crore, has made the incumbents heavily strained.

Indian telecom operators owe the government nearly Rs 1.47 lakh crore in license fee (LF) and spectrum usage charges (SUC), the communications ministry told the Parliament Wednesday. Of the total amount, license fee comes to Rs 92,642 crore as of July this year, while SUC comes to Rs 55,054 crore as of October end this year.
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