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India’s struggling telcos welcome government’s latest measures on AGR and foreign investments

The Union Cabinet approved changes to existing requirements including a moratorium option for struggling telecom operators.

The government on September 15 announced measures that the Union Cabinet had decided to take to address the telecom industry's financial troubles. "All non-telecom revenue will be removed from the definition of Adjusted Gross Revenue," Information Technology Minister Ashwini Vaishnaw said in a press conference. Additionally, all telecom foreign investment can now happen through a 100% automatic route, with the caveat that investment from neighbouring countries (read: China) will be subject to review under Press Note 3 of 2020, which restricted such FDI inflows. While the AGR definition change is only applicable starting now, the government announced that telecom operators can avail of a four-year moratorium on payments to existing dues — provided that they pay on accrued interest over the period. The moves may make it easier for Vodafone Idea to obtain investments from institutional investors, who have been hesitant to bet on the struggling telco. But this essentially just buys some time for Vi, and the full weight of its past dues will largely continue. Airtel praised the changes in a press statement issued shortly after the government's announcement. But Gopal Vittal, MD & CEO (India and South Asia), at Airtel added, "More needs to be done, however, towards a sustainable tariff regime to ensure the industry gets a fair return. This will in turn allow it continue investing in new technologies and innovation to bring world-class services to customers." The Cellular Operators Association of India (COAI) said, "These steps would go a long way in relieving the financial…

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