On the recommendation of the Committee of Secretaries (CoS) on the relief to the debt-ridden telecom sector the cabinet on 20th November announced a relief package allowing telcos a 2-year moratorium on spectrum-related dues from 2020-2022.
Crux of the Matter
Telcos had reported a Q2 loss of Rs 1 lakh crore after which the central government had formed a Committee of Secretaries (CoS) to look into relief package for the ailing sector.
The Cabinet’s decision will give immediate relief of Rs 42,000 crore to mobile phone companies and majorly to Vodafone Idea and Bharti Airtel who are under heavy debt and losses.
The deferred amounts would be equally spread over the remaining instalments and companies opting for the two-year deferred payment will have to furnish a bank guarantee.
The relief package would ease the cash outflow and facilitate payment of statutory liabilities and interest on bank loans.
The telecom ministry informed in the parliament that telecom operators owe the government nearly Rs 1.47 lakh crore in license fee (LF) and spectrum usage charges (SUC).
Curiopedia
Telecom License Fees – In India telecom operators pay license fees and spectrum usage charge to the government as a percentage of their adjusted gross revenue. Rcently Supreme Court had asked all telcos to pay their outstanding dues to the Department of Telecommunications in 3 months. The SC noted that the said companies had benefited from revenue share models implemented from 1999 – a change from previous fixed fee model and in 2013 the revenue share was reduced from 15% to 8%. Given this context, the SC judged the telco’s conduct ro be “highly unfair”. More Info
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