Top Govt Officials Talk Relief Measures For AGR-Hit Telecom Sector

Top Govt Officials Talk Relief Measures For AGR-Hit Telecom Sector 1

Amritsar, NFAPost: The Central government is in an effort to chalk out urgent relief measures for telecom companies that are staring at a 1.47 trillion rupees unpaid adjusted gross revenue (AGR) dues.

Officials of the Department of Telecommunications convened a meeting on Sunday to deliberate on options before the deadline of March 17 for the telecom companies to pay off the AGR dues.

In Sunday’s meeting, where officials from the finance ministry, ministry of commerce and industry, and were also said to be present, there came a unanimous call that all efforts should be put in place to save the existing companies.

Of the 1.47 trillion rupees due, which includes 926.42 billion rupees in unpaid licence fee and 550.54 billion rupees in outstanding spectrum usage charges, Vodafone Idea Ltd and Bharti Airtel Ltd owe almost 60%.

Out of all the telecom companies, Vodafone Idea Ltd, which has so far only paid 7% of its 530 billion rupees due, is the most vulnerable and has already stated that it will not be able to survive without a bailout from the government.

“If we are not getting anything, then I think it is the end of story for Vodafone Idea… They (government) have publicly stated that they want three players from the private sector and one player from the public sector, so I think we can expect much more stimulus from the government because it is required by the sector to survive,” Vodafone Idea Chairman Kumar Mangalam Birla has said in December.

Only Reliance Jio stays out of this financial stress situation as its previous dues to the tune of 2 billion rupees has been cleared. The Supreme Court’s AGR judgement was given on Oct 24, and initially had a deadline of Jan 23 to pay off the dues.

In Sunday’s meeting, the various options laid on the table included a possible concession on payment of the penalty, an instant refund of the input tax credit, or a soft loan for the telecom companies to clear the AGR dues.

Officials from the finance ministry, were however, not in line with the proposal of waving off a part of the penalty payment, as according to them this would set a wrong example and may lead to similar demands from other sectors in such situations.

In case, the option of providing soft loan works out, the officials suggested that such credit should not go through the telecom department, as it is also the receiver of the dues. They suggested that any public sector bank or financial institutions should be used to provide such a loan.

The government is keen to find a solution as, given the size of the sector, telecom companies running out of business would put direct stress on the banking sector, restrict consumers’ choice and also affect the investor’s sentiment along with becoming a hindrance to governments ambitious digital India programme.

The upcoming 5G auctions seem to be under pressure due to the financial crisis that the telecom industry is currently facing.

The government failing to recover the entire dues will only be left with the option to invoke the bank guarantees submitted by the companies, and in extreme cases wherein the bank guarantees are also insufficient, the telecom department may have to cancel the mobile licence of the companies.

A meeting of multi-ministry digital communications commission is scheduled for today.

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