Govt approves package for debt-hit telecom sector

The Centre on Wednesday cleared a relief package for the debt-hit telecom sector, which includes giving more time to operators to pay for the spectrum bought in auctions.

The Union Cabinet chaired by Prime Minister Narendra Modi approved the package, which was earlier recommended by Inter Ministerial Group on the telecom sector.

The cabinet also relaxed the spectrum holding limit for the telecom operators, said a statement.

The IMG was tasked last year to suggest policy reforms and strategic interventions for the troubled sector bruised by falling tariffs, eroding profitability, and mounting debt in the face of stiff competition from new entrant Reliance Jio.

"Telecom firms were given one-time opportunity to opt for higher number of installments (maximum 16 installments) apart from currently permitted 10 installments for payment for the spectrum brought through auction. The increased installment is based upon the principle that the Net Present Value (NPV) of the Payment Due is protected as per respective notice inviting application for auction of spectrum from 2012. The total amount received will be higher by Rs 74,446.01 crore till 2034-35," said a statement.

The cabinet also revised the overall spectrum cap from the current limit of 25% to 35%. The current intra-band cap has been removed. Instead, there is a cap of 50% on the combined spectrum holding in the sub-1 GHz bands (700 MHz, 800 MHz and 900 MHz bands).

There will be no cap for individual or combined spectrum holding in above 1 GHz band. The revised spectrum cap limits may be revisited after Final Acts of World Radiocommunication Conference (WRC) 2019, said the statement.

The restructuring of the deferred payment liability will provide relief to the telecom sector. Revising the limit for the spectrum cap holding will facilitate consolidation of telecom licensees and may encourage the participation in the future auction, said the statement.

The official said the Cabinet has approved the two key measures to facilitate investments and consolidation in the sector, which is facing Rs 4.6 lakh crore debt.