With the need for a telecom bailout package getting more urgent every day, the government has sprung into action. The committee of secretaries, that has been set up to chart a bailout package for the ailing telecom sector, has asked Department of Telecom and Telecom Regulatory Authority of India (TRAI) to give their recommendations on incentives and reforms that are feasible and urgent for the industry, sources told CNBC-TV18.
The committee comprising of secretaries of the Department of Telecom, corporate affairs ministry, law ministry, revenue department and economic affairs department has held two meetings so far to discuss the matter.
According to a source, the DoT has also met with the committee of secretaries this week to present a detailed account on the state of the telecom sector and the areas of stress. Post the meeting, the panel asked for recommendations from both DoT and TRAI as it wants to fast-track the bailout package and complete it by January 2020 or before, the source, who did not want to be named, said.
"It’s a positive move that DoT and TRAI views have been sought since both have had regular consultations with telecom players and would be able to present a comprehensive outlook to the committee of secretaries," said the source.
The telecom sector has been ailing with a high debt burden, tax levies that comprise almost 30 percent of its revenue and steep network costs.
While working capital is strained and debt is mounting, the SC ruling on the definition of Annual Gross Revenue (AGR) has added a massive liability of an expected Rs 1.43 lakh crore on the telecom players, with a large chunk falling on Bharti Airtel and Vodafone Idea.
The panel will be meeting telecom operators to get their view. While the operators have submitted their demands seeking a waiver of interest and penalties on the unpaid AGR amount, the COS will be speaking to executives of these companies to get a detailed presentation of the pain points.
"They will meet with Cellular Operators Authority of India, Bharti Airtel, Vodafone Idea and Reliance Jio to begin with and then meet BSNL and MTNL in the next round," added another source.
Telecom players have asked for deferment of payments of spectrum won through auctions, lowering airwave usage charge, lowering obligation of telecom service providers for providing 5 percent of their annual revenues for the USOF and reduction in the AGR fee from 8 percent to 3 percent, among others.
"COS is considering all possible reforms which will enable long-term relief for the sector but it will not take drastic moves," added the source. "The most likely reforms that are being considered are cuts in various tax levies to enable these companies to save costs for working capital, lowering interest rates on and widening the scope and tenure of payments for spectrum."
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