Telecom: Two-year Moratorium on Spectrum Payments

The Cabinet cleared a two-year moratorium on spectrum payments, which will give immediate relief of more than ₹42,000 crore to India’s three mobile phone companies, two of which — Bharti Airtel and Vodafone Idea — have been struggling with high debt and huge losses amid brutal competition.

“In view of the current financial stress faced by major telecom service providers and in pursuant of the recommendations by the Committee of Secretaries, it is decided to defer receipts of spectrum auction instalments due from the TSPs (telecom service providers) for the years 2020-21 and 2021-2022,” finance minister Nirmala Sitharaman said at a press briefing after a Cabinet meeting.

Thus, Vodafone Idea, Bharti Airtel and Reliance Jio would need to make the next spectrum payment to the government only in fiscal 2022-23.

Besides the spectrum payments on which they got relief, Vodafone Idea and Airtel also need to pay a combined ₹89,000 crore in licence fees, spectrum usage charge, penalties and interest to the government after a recent Supreme Court ruling expanded the definition of adjusted gross revenue. The AGR dues have to be paid in less than three months and the government has said that it was not currently considering any changes to this.

While the industry was upbeat about Wednesday’s decision, it hoped that the government would also consider its other requests, including reduction in levies and taxes, besides waiving the interest and penalties which form a bulk of the ₹1.47 lakh crore AGR dues that the companies face. Of this, Vodafone Idea owes ₹53,039 crore to the government and Airtel, Rs 35,585 crore.

Earlier in the day, telecom minister Ravi Shankar Prasad told the Lok Sabha that the government was currently not considering a waiver on penalties and interest on unpaid licence fees or extending the three-month deadline for paying those.

In her briefing, Sitharaman said the deferred amounts would need to be equally spread over the remaining instalments to be paid by the carriers, without any increase in any existing time period specified for making the payments.

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