India Allows Telecom Firms More Time to Pay Spectrum Dues
India extended the time limit for payment of spectrum-related charges to the government.
(Bloomberg) -- India extended the time limit for payment of spectrum-related charges to the government in a move that will provide relief to telecom operators hit by an intense price war spurred by a new entrant’s offer of free calls and lower data charges.
The federal cabinet Wednesday allowed wireless carriers to hold up to 35 percent of spectrum in a frequency band compared to earlier limit of 25 percent. It also approved longer payment schedules for telecom companies for meeting their spectrum liabilities, government spokesman Frank Noronha said in a Twitter post.
The steps approved by the cabinet will help raise cash flows of mobile operators and higher caps will enable consolidation of telecom licensees and encourage participation in future auctions, according to the post.
The steps will also help the carriers weather competition from billionaire Mukesh Ambani’s Reliance Jio Infocomm Ltd. The new entrant has compelled larger rivals to match its free call offers, eroding their profits, and pushed the smaller ones off the market.
Longer payment schedules will spread out the financial burden on indebted incumbents as they juggle repayments with capital spend needs. The revised spectrum caps are expected to benefit the larger telecom carriers looking to consolidate through mergers.
To contact the reporters on this story: Bhuma Shrivastava in Mumbai at bshrivastav1@bloomberg.net, Santanu Chakraborty in Mumbai at schakrabor11@bloomberg.net.
To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Ashutosh Joshi
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