In a bid to provide relief to the stressed telecom sector, the Union Cabinet on Wednesday has approved a moratorium on payment of spectrum dues by telcos.
This will provide much-needed time to ailing telecom operators like Vodafone Idea that have to pay thousands of crores of rupees in unprovisioned past statutory dues.
Telecom Minister Ashwini Vaishnaw announced further that the government has decided to allow 100 per cent foreign direct investment (FDI) in the sector.
The move is aimed at providing relief to incumbent telcos such as Vodafone Idea and Bharti Airtel which have to pay thousands of crores in unprovisioned past statutory dues. It comes weeks after billionaire Kumar Mangalam Birla resigned as chairman of Vodafone Idea (Vi) on August 4.
Speaking on the decisions taken for the telecom sector, Vaishnaw said that the government decided to rationalise the definition of Adjusted Gross Revenue (AGR). He said that non-telecom revenue under AGR will be removed.
Here’s how the telecom industry leaders reacted
Reliance Jio said in a statement that it heartily welcomes the reforms and relief package announced by the Government of India, as these are a timely step towards strengthening India’s telecom sector.
Mukesh D Ambani, Chairman, Reliance Industries, said, “Telecom sector is one the prime movers of the economy and the key enabler for making India a Digital Society, I welcome the Government of India’s announcement of reforms and relief measures that will enable the industry to achieve the goals of Digital India. I thank Hon. Prime Minister for this bold initiative.”
Furthermore, telco major Bharti Airtel also said that these reforms pave way for a sustainable three private, one state-owned telecom operator structure.
Airtel’s top boss Sunil Mittal, said: “We congratulate and thank the Government, who under the decisive leadership of PM Narendra Modi, has undertaken these seminal reforms to lift an industry that’s at the core of his Digital India vision. The latest reforms ensure that the industry is able to invest fearlessly and support India’s digital ambitions. We also compliment Minister of Communications and the Finance Minister for their leadership and support.”
Gopal Vittal, Bharti Airtel thinks the newly approved telecom relief package is exciting as it opens up a lot of oppurtunities.
“For over two and a half decades, Bharti Airtel has pioneered India’s telecom revolution. These fresh reforms will further boost our efforts to invest in this exciting digital future and enable us to be one of the leading players in India’s digital economy. More needs to be done, however, towards a sustainable tariff regime to ensure the industry gets a fair return. This will in turn allow it continue investing in new technologies and innovation to bring world-class services to customers,” Vittal said.
The sector was also hit by a Supreme Court ruling last year which forces carriers Bharti Airtel and Vodafone Idea to give in to a government demand for billions of dollars in dues which they have long contested.
Vodafone, which has a net debt of Rs 1.91 lakh crore, has previously raised serious concerns about its ability to stay afloat without government help. Its billionaire non-executive chairman stepped down last month.
Bharti Airtel has said it paid dues estimated at Rs 1.8 crore and government figures show it owes a further Rs 259.76 crores.
Separately, the cabinet also approved a production-linked incentive scheme for the automobile sector, the source said, without giving details.
Briefing reporters on the decisions taken by the Cabinet, Telecom Minister Ashwini Vaishnav said nine structural reforms for the telecom sector were approved.
