The telecom sector has got a relief with the Union Cabinet on Wednesday clearing a package for the stressed telecom sector. According to the Telecom Minister, telcos will pay interest on moratorium period.
The relief package includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign investment through the automatic route.
The decision is expected to offer relief to companies such as Vodafone Idea owe crores of rupees in the form of unprovisioned statutory dues.
Telecom Minister says spectrum auction to be held in last quarter of the financial year.
The moratorium will start from October 1, the Cabinet said.
PM took a bold decision over AGR (adjusted gross revenue) today. A decision has been taken to rationalise the definition of AGR. All non-telecom revenue will be taken out of AGR: Ashwini Vaishnaw, Minister for Communications pic.twitter.com/K6ONqNyZ9I— ANI (@ANI) September 15, 2021
“The reforms are deep and broad. They are structural. These reforms will bring in change today, tomorrow and in the future. I do not like to put a number on the package as it is revenue-neutral for the government,” the minister said. The moratorium will not impact the government's revenue, the minister said.
The Union cabinet has also allowed 100 percent FDI in the telecom sector with safeguards. The Telecom Minister said that the Cabinet is rationalising AGR definition, excluding non-telecom revenue of telcos from payment of statutory levies.
Briefing reporters on the decisions taken by the Cabinet, Telecom Minister Ashwini Vaishnav said nine structural reforms for the telecom sector were approved.
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: Minister for Communications @AshwiniVaishnaw pic.twitter.com/DMWLDoK5ip— PIB India (@PIB_India) September 15, 2021
The definition of AGR, which had been a major reason for the stress in the sector, has been rationalised by excluding non-telecom revenue of telecom companies.
AGR refers to revenues that are considered for payment of statutory dues.
The minister said that 100 per cent FDI (Foreign Direct Investment) in telecom via the automatic route was approved by the Cabinet.
Among the measures approved were a four-year moratorium on unpaid dues, AGR and spectrum dues, he said.
These measures are expected to ease the cash flow issues being faced by some players in the industry.
The development comes in the wake of businessman Kumar Mangalam Birla resigning as Chairman of the much-troubled Vodafone-Idea combine on August 4. This followed Birla offering his stake in the telco to the Government or any other company approved by the Government.
Vodafone-Idea has to pay about Rs 50,399.63 crore in statutory dues dating back over past many years.
Vodafone-Idea’s total gross debt (excluding lease liabilities and including interest accrued but not due) stood at Rs 1,91,590 crore, comprising of deferred spectrum payment obligations of Rs 1,06,010 crore and adjusted gross revenue (AGR) liability of Rs 62,180 crore due to the Government as of June 30, 2021.
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