Telcos prone to get moratorium of 4 years for AGR dues

The Union Cabinet on Wednesday endorsed a moratorium on payment of spectrum dues by telecom firms as part of a package for the sector pointed toward offering help to organizations, for example, Vodafone Idea that need to pay a large number of crores of rupees in unprovisioned past statutory dues, said news reports.

Cabinet has supported ban of 4 years for AGR contribution, the reports states. There is likewise a component of equity-related change in the relief package, which will offer a gesture of goodwill and assist organizations with raising funds, say reports.

The move will come a month and a half after billionaire Kumar Mangalam Birla resigned as chairman of beleaguered Vodafone Idea Ltd (VIL) on August 4.

VIL’s August 4 intimation about the top-level changes had come on a day stock exchanges looking for explanation from the organization over the generally announced June 7 letter of Birla to the Cabinet Secretary offering his stake in Vodafone Idea to the government or any organization approved by the government free of charge.

VIL, which was made from the consolidation of British telecom monster Vodafone’s India unit and Birla’s Idea Cellular Ltd, needs to pay about Rs 50,399.63 crore in legal contribution going back over past numerous years.

The package, which at first was generally expected to be taken up by the Cabinet last week, will offer a breather to the three private player industry, when VIL is going up against existential emergency.

The Union Cabinet is likewise prone to approve on Wednesday the reconsidered production-linked incentive (PLI) scheme for the car area, which aims at promoting domestic manufacturing and make jobs, as per sources, revealed PTI.

The government is believed to have cut the cost for this PLI scheme to about Rs 26,000 crore, they said.

Last year, the government had declared the scheme for the automobile and auto components sector with an expense of Rs 57,043 crore, reserved for five years.

The sources didn’t reveal the justification behind updating the scheme to Rs 25,938 crore, yet stated that the spotlight is currently more on battery electric and hydrogen fuel unit vehicles.

Vodafone Idea, in its annual report, has hailed the industry’s “unsustainable financial duress” and trusted that the government would offer the essential help to address “all structural issues” looked by the sector.

The total gross debt (excluding lease liabilities and including interest gathered yet not due) as of June 30, 2021 of VIL remained at Rs 1,91,590 crore, involving deferred spectrum payment obligations of Rs 1,06,010 crore and adjusted gross revenue (AGR) responsibility of Rs 62,180 crore that are because of the government.

Industry experts also have been sounding an alert over the dangers of the Indian telecom market transforming into a duopoly.

Apex association COAI recently made a strong pitch for cut in levies, doubling tenure of auctioned radiowave holdings, alongside 7-10 year moratorium for spectrum payments, to address viability concerns of the sector.

Last month, Sunil Mittal, Chairman of India’s second biggest telecom organization Bharti Airtel, had made a passionate pitch for hike in tariffs and a cut in government levies to save the industry.

Mittal had said while 35% of industry’s income goes to the government in taxes and levies, telcos are stacked with a phenomenal debt of AGR (Adjusted Gross Revenue) dues and spectrum payments.

Levies are very high in the telecom sector, Mittal had said adding that “levies and load on industry needs to be brought down” for India to genuinely understand its digital vision.