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Reforms to change framework of Indian telecom sector: Minister
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SME Times News Bureau | 15 Sep, 2021
As the Union Cabinet on Wednesday approved several reforms and relief
measures for the telecom sector, Union Minister for Communications,
Ashwini Vaishnaw said that these measures will change the entire
framework of the Indian telecom sector.
Among several decisions,
the Cabinet has approved a four-year moratorium on all dues by telecom
operators including the adjusted gross revenue (AGR), however, those
operators availing the moratorium will have to pay interest of "MCLR+2
per cent" and a change in the definition of AGR.
Post the change in definition all non-telecom revenue will not be calculated under AGR, prospectively.
The
decisions came at a time when the sector is going through severe stress
and is on the brink of duopoly with Vodafone Idea in a beleaguered
state.
Vodafone Idea would be most benefited from the government decision on moratorium on dues.
Addressing
the media post the Cabinet meeting, the minister said: "Today, 9
structural reforms and 5 process reforms in the telecom sector have been
approved. These reforms will change the framework of the entire telecom
sector."
In another major move, the Cabinet has allowed 100 per cent FDI in telecom under the automatic route.
Further,
spectrum user charges will be rationalized and there will be now an
annual compounding of rates. Spectrum can now be surrendered and also
shared by the telcos.
"In order to provide relief to the troubled
telecom sector, the Union Cabinet agreed a moratorium on operators'
payment of spectrum dues on Wednesday. This will give troubled telecom
carriers like Vodafone Idea much-needed breathing room as they pay
millions of crores of rupees in unprovisioned previous statutory dues,"
Sonam Chandwani, Managing Partner at KS Legal & Associates.
"The
liability is postponed rather than totally written off. The banks
association breathes a sigh of relief, as they owe large sums to
Vodafone. Though it is unclear how Vodafone Idea will pay off the
obligations, the extra time does help with stress management," she said.
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