Relief package likely for stressed telecom sector: Here’s all you need to know

The authorities is making ready a long-term reduction package for the telecom sector as a few telcos are going through monetary stress. The Supreme Court’s current verdict on the case associated to adjusted gross revenues (AGR) dues has made issues troublesome for two main telecom corporations — Vodafone Idea and Bharti Airtel.

A couple of days in the past, it was reported that the government is planning a long-term relief package for the telecom sector. The reduction package is anticipated to present reduction from many contentious points plaguing telcos.

Multiple authorities officers have shared particulars concerning the telecom sector reduction package, which is able to embrace a plan to redefine AGR dues and exclude ‘non-telecom items’

RELIEF PACKAGE BY END OF AUGUST?

The relief package is expected to provide massive relief to legacy telecom firms, which have to repay a huge amount of AGR dues and spectrum charges.

The proposal for the telecom sector relief package will be sent to the finance ministry next week, reported The Economic Times. If the package is approved, an announcement is likely by the end of the month.

An official confirmed to the publication that the telecom department’s reduction package will permit telecom corporations to give up unused spectrum, scale back financial institution ensures and section out levies.

However, the largest reduction to the sector will contain redefining AGR dues to exclude non-telecom objects. All of those adjustments will are likely to convey long-term reduction to the telecom sector, particularly extremely stressed telcos like Vodafone Idea.

Read | What the SC’s dismissal of telcos’ pleas on adjusted gross revenue means for them

VODAFONE IDEA APPEALS FOR HELP

Vodafone Idea, the telco with the largest share of AGR dues, is sort of getting ready to a collapse because it has failed to elevate sufficient capital after getting approval from shareholders final 12 months.

The debt-laden telco has already mentioned it isn’t producing the operational revenue required to pay the AGR dues by March 31, 2031.

Also Read | Vodafone Idea posts highest-ever loss by an Indian firm at Rs 73,878 cr in FY20

Vodafone Idea together with Bharti Airtel and Tata Teleservices had approached the Supreme Court earlier to search re-computation of their pending AGR dues, decided by the Department of Telecommunication (DoT). However, the highest courtroom rejected the plea and made it clear that the telcos can have to clear their pending AGR dues inside the deadline.

With nothing stepping into favour of Vodafone Idea, Aditya Birla Group Chairman Kumar Mangalam Birla wrote a letter to Cabinet Secretary Rajiv Gauba in June, providing to hand over his 27 per cent stake within the ailing telecom agency to the federal government or some other entity that the federal government might think about.

In the letter dated June 7, Birla mentioned buyers usually are not keen to spend money on the telecom firm due to a scarcity of readability over a number of points together with the AGR legal responsibility. He additionally mentioned Vodafone Idea will come to an “irretrievable point of collapse” without immediate active support from the government.

“It is with a sense of duty towards the 27 crore Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity- public sector/government /domestic financial entity or any other that the government may consider worthy of keeping the company as a going concern,” Kumar Mangalam Birla said within the letter.

However, senior authorities officers have confirmed to ET that no proposal on this regard has been thought of but. Therefore, the federal government stays targeted on offering reduction solely by means of the reduction package.

On July 23, Vodafone Group CEO Nick Read additionally admitted that the scenario is “high stressed” at its India telecom three way partnership. He additionally added that the UK firm is not going to infuse an “additional equity” in Vodafone Idea.

Read additionally highlighted clearly that its viability depends upon refinancing money owed which might be arising for cost, monetisation of property, authorities assist on points together with AGR, ground pricing and fundraising.

It could also be famous that Vodafone Idea is but to report a quarterly revenue because the merger of Vodafone India and Idea Cellular on August 31, 2018.

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