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Union cabinet approves proposals to mitigate telecom sector’s financial stress

A telecom tower

The Union Cabinet chaired by Prime Minister Narendra Modi approved proposals for mitigating financial stress being faced by telecom service sector on November 20. Under the approval, the Department of Telecommunication (DoT) will provide an option to telecom companies to defer payment of the spectrum auction installments that are due for 2020-2021 and 2021-2022, either for one or both years. This comes soon after Airtel, Vodafone Idea and Jio said they will increase phone call and data tariffs. Other provisions of the proposals The deferred amounts bill will be equally divided among the remaining installments to be paid by TSPs Interest will be charged as stipulated while auctioning off the concerned spectrum in order to protect Net Present Value (NPV) The decision of deferring spectrum payment installments for two years will be implemented within 2 weeks. The deferment of spectrum auction installments will ease cash outflow of stressed TSPs, the government said. It will facilitate payment of statutory liability and interest on bank loans. The cabinet decision is based on the recommendation by a committee of secretaries (CoS) headed by Cabinet Secretary Rajiv Gauba. This move will offer an estimated Rs 42,000-crore overall relief to Airtel, Vodafone-Idea, and Jio for the next two years, per Business Standard. While Vodafone Idea has received the maximum relief of more than Rs 24,500 crore, Airtel and Jio’s moratorium is pegged at around Rs 11,000 crore and Rs 6,800 crore, respectively, the report said. The telecom lobby Cellular Operators Association of India (COAI) thanked…

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