Cash flow freedom for 4 years will allow telcos to move forward to 5G play, says Ashwini Vaishnaw

The Cabinet on Wednesday approved a relief package for the telecom sector while announcing a moratorium of four years on Adjusted Gross Revenue (AGR) dues.

The package will help India's three major wireless carriers including Mukesh Ambani's Reliance Jio, and Vodafone Idea.

In an exclusive interview with Prashant Nair and Reema Tendulkar, union telecom minister Ashwini Vaishnaw says a four-year moratorium with NPV protection is a win-win formula.

"The focus of the relief package was on reforms, especially the long contentious, highly litigated issues like AGR should be solved, and the industry should move forward. We wanted the package to be revenue-neutral and that is why a 4 years moratorium with net present value (NPV) protection is a win-win formula."

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The government and customers want healthy competition in the sector, he said.

"From our perspective and from customer's perspective, we want healthy competition in the sector. Healthy competition will be achieved by three things - first, distressing the balance sheet, second having the reforms which were needed in the sector and third the quality of service that the operators provide to the customers."

"All the three things combined will define whether the industry further consolidates or more players come in, says the minister, "We would like more players to come in."

He says cash flow freedom for four-year will allow telecom companies to move forward to the 5G play.

"This is the time when the transition will happen from 4G to 5G and that requires lots of technological investments, infrastructure investments, so looking at the overall picture, having a cash flow freedom for the next 4-years is a very big thing. The interest cost on that is not a very huge cost. In my interactions with telcos, they have been very happy because this gives them a chance to move forward to the 5G play."