The Cabinet on Wednesday has deferred the choice on providing some relief package to the telecom sector, senior officialdom said.
It was expected to think about some relief measures within the sort of rationalisation of telecom licence fee and changing the definition of Average gross sales (AGR) that the industry has been demanding for long in order that they have not pay more interest, and also exclude non-telecom items from the definition of AGR.
The sources, however, declined to offer details on why the proposal wasn’t discussed, and whether an equivalent are often haunted next week. Anurag Thakur, Minister of Sports, Youth Affairs and knowledge and Broadcasting said that there was no call taken anything associated with telecom relief. “There was nothing like that,” he said.
According to government sources, a gathering was held internally between members of the Digital Communications Commission (DCC) on the relief package for the world and therefore the recommendation had been sent to the cupboard .
Moratorium
In November 2019, the govt had allowed two-year moratorium on the deferred payments for financial years 2021 and 2022, which could are extended by the cupboard , as per the sources.
A few months ago, ailing Vodafone-Idea (VIL) had also requested the govt to grant one-year moratorium over its spectrum instalment of around ₹8,200 crore due next April. It said otherwise, the corporate wouldn’t have enough funds for the AGR payment due in March 2022.
According to analysts, VIL’s financial position immediately needs immediate attention because it is probably going to impact other stakeholders and therefore the industry structure too. The financial position of the corporate has been deteriorating with losses and debt rising to around ₹1.8-lakh crore now.
ICRA study
As per a modern ICRA study, VIL has been under financial stress, as reflected by mounting losses and burgeoning debt levels, which is probably going to impact its financial lenders also as government, aside from having an impact on its employees, its subscribers and associated industries, most prominently towers.
According to Ankit Jain, Sector Head and Assistant Vice-President, ICRA, “Given the present situation and sizeable obligations within the near term for VIL, material external support (primarily from government) can act as a relief measure.”
He added, “The best relief can are available the shape of extension of moratorium on spectrum dues beyond FY2022, which may end in deferment of dues payable in FY2023 of ₹32,000 crore for the industry of which ₹16,000 crore is for VIL. Moreover, a discount within the levies paid by telcos, namely, licence fee and spectrum usage charges also can lift the EBITDA. a 1 per cent reduction in levies results in an annual saving of ₹1,600 crore for the industry.”
Teleco firms’ shares
Shares of VIL were up 4 per cent while Bharti Airtel hit record highs during the morning trade on Wednesday because the Cabinet was expected to require up the Department of Telecommunications’ (DoT’s) proposal for offering a relief package to the telecom industry.
However, VIL’s shares closed at ₹8.07 apiece, down 2.54 per cent from the previous draw in the BSE. Airtel’s shares were also down 0.43 per cent at ₹667.80 a piece.