Government Panel Meets To Discuss Bailout Package For Telecom
A pedestrian walks past an Idea Cellular Ltd., left, and a Bharti Airtel Ltd. stores in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)  

Government Panel Meets To Discuss Bailout Package For Telecom

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A high-level committee of secretaries met on Tuesday to explore a financial bailout package for the telecom sector while the Department of Telecommunications started work on issuing demand notices seeking Rs 1.4 lakh crore in past dues from mobile-phone firms.

Sources said the DoT is working out the exact liability that Bharti Airtel Ltd., Vodafone Idea Ltd., and other telecom operators owe to the government following the Oct. 24 Supreme Court judgment on the way statutory dues such as license fee and spectrum usage charge has to be calculated.

The demand notices will be issued in next two weeks after an assessment in light of the court order is done, they said adding telecom operators are expected to pay them within Supreme Court mandated 90 days time period.

The committee, headed by Cabinet Secretary Rajiv Gauba, has begun work on a financial bailout package sought by the debt-laden telecom carriers.

The panel, which includes secretaries of the department of telecom, law, corporate affairs, revenue and economic affairs as also NITI Aayog Chief Executive Officer, had its second meeting on Tuesday but no decision has been taken, they said.

It has been asked to look at the demands of telecom service providers for deferment of payments they had promised for the spectrum won through auction as well as consider lowering airwave usage charges.

It has also been asked to consider lowering the obligation of telecom operators for providing 5 percent of their annual revenue for the Universal Service Obligation Fund, they said.

In parallel, the Telecom Regulatory Authority of India is expected to examine prescribing minimum charge for voice and data services, which according to old telecom operators will ensure long-term viability and robust financial health of the sector.

The panel was set up a day after an unsigned paper seeking a waiver of interest and penalties on the unpaid amount, as well as staggering payment of principal license fee over 10 years was submitted to the DoT on Oct. 28—the day Bharti Airtel Chairman Sunil Bharti Mittal and his brother Rajan Mittal had met Telecom Minister Ravi Shankar Prasad and Telecom Secretary Anshu Prakash.

Citing the recent Supreme Court ruling that had upheld the government's position on including revenue from non-telecommunication businesses in calculating the annual gross revenue of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer, the note sought a two-year moratorium on spectrum payments beyond April 2020 till March 2022, reduction in license fee from 8 percent to 3 percent, and cutting USOF to 1 percent.

Following the apex court order, Airtel, Vodafone-Idea and other telecom operators may have to pay the government a whopping Rs 1.42 lakh crore within three months.

According to the DoT's preliminary calculations, Bharti Airtel faces a liability of around Rs 42,000 crore after including license fees and spectrum usage charges, while Vodafone-Idea may have to pay about Rs 40,000 crore. Reliance Jio may have to pay around Rs 14 crore.

The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt companies.

Though the matter had been in courts for over a decade, the companies had not made any provisions for potential liability in their books of accounts and in absence of which it is now knocking on government doors for relief.

Also read: India Refuses to Waive $13 Billion of Mobile-Phone Firms’ Dues

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