<p>The relief package announced by the government for the telecom sector can help the ailing sector to recover from a state of extreme distress, or at least stop its continuing financial slide. The telecom operators are weighed down by huge debts, low profits and falling cash flows, and even the top one among them is surviving because of the support from its otherwise resourceful management. The weakest among them, Vodafone Idea, would have gone completely down without support from the government, and could therefore be the biggest beneficiary of the package. The government, according to telecom minister Ashwini Vaishnaw, has made nine structural changes and five process reforms. These include a redefinition of Adjusted Gross Revenue (AGR), enhancement of the life of spectrum by 10 years, removal of a financial constraint to spectrum-sharing and a four-year moratorium on all spectrum and AGR dues. </p>.<p>All these are demands that have been made by the sector for many years. The decision on AGR would exclude non-telecom revenues from its purview prospectively. All operators owe huge amounts to the government under this head. Along with the decision to give a four-year moratorium on AGR payments and spectrum dues purchased in past auctions, this will go a long way to lighten the current financial burden of the companies. Vodafone Idea, for example, would be relieved that it does not have to pay about Rs 9,000 crore towards AGR payments by March 31, 2022, and over Rs 15,000 crore in the next financial year towards spectrum. The moratorium will give an annual cash flow benefit of Rs 46,000 crore to the industry, which has an estimated debt burden of over Rs 3.6 lakh crore. The government can also exercise the option of converting debt into equity at the end of the moratorium. </p>.<p><strong>Also read: <a href="https://www.deccanherald.com/business/telecom-reforms-to-usher-in-new-era-for-india-digital-ambitions-to-boost-funding-industry-players-1030817.html" target="_blank">Telecom reforms to usher in new era for India digital ambitions, to boost funding: Industry players</a></strong></p>.<p>The decision to allow 100% FDI through the automatic route will help the companies to raise capital, and the package of measures will help to increase investor confidence. The government has shown that it is serious in coming to the aid of a crucial industry by forgoing some of its own current revenues. But it may also have been persuaded by the prospect of the industry going down, putting at risk even the present revenues and endangering the finances of public sector banks which have extended huge loans to the sector. In any case, the sector has got a respite that should be utilised well to slim down debt, improve capex and technology, and to adopt a sustainable business model. The government may have to do more to ensure that the sector remains competitive and is not reduced to a duopoly. </p>.<p><strong>Check out latest videos from <i data-stringify-type="italic">DH</i>:</strong></p>
<p>The relief package announced by the government for the telecom sector can help the ailing sector to recover from a state of extreme distress, or at least stop its continuing financial slide. The telecom operators are weighed down by huge debts, low profits and falling cash flows, and even the top one among them is surviving because of the support from its otherwise resourceful management. The weakest among them, Vodafone Idea, would have gone completely down without support from the government, and could therefore be the biggest beneficiary of the package. The government, according to telecom minister Ashwini Vaishnaw, has made nine structural changes and five process reforms. These include a redefinition of Adjusted Gross Revenue (AGR), enhancement of the life of spectrum by 10 years, removal of a financial constraint to spectrum-sharing and a four-year moratorium on all spectrum and AGR dues. </p>.<p>All these are demands that have been made by the sector for many years. The decision on AGR would exclude non-telecom revenues from its purview prospectively. All operators owe huge amounts to the government under this head. Along with the decision to give a four-year moratorium on AGR payments and spectrum dues purchased in past auctions, this will go a long way to lighten the current financial burden of the companies. Vodafone Idea, for example, would be relieved that it does not have to pay about Rs 9,000 crore towards AGR payments by March 31, 2022, and over Rs 15,000 crore in the next financial year towards spectrum. The moratorium will give an annual cash flow benefit of Rs 46,000 crore to the industry, which has an estimated debt burden of over Rs 3.6 lakh crore. The government can also exercise the option of converting debt into equity at the end of the moratorium. </p>.<p><strong>Also read: <a href="https://www.deccanherald.com/business/telecom-reforms-to-usher-in-new-era-for-india-digital-ambitions-to-boost-funding-industry-players-1030817.html" target="_blank">Telecom reforms to usher in new era for India digital ambitions, to boost funding: Industry players</a></strong></p>.<p>The decision to allow 100% FDI through the automatic route will help the companies to raise capital, and the package of measures will help to increase investor confidence. The government has shown that it is serious in coming to the aid of a crucial industry by forgoing some of its own current revenues. But it may also have been persuaded by the prospect of the industry going down, putting at risk even the present revenues and endangering the finances of public sector banks which have extended huge loans to the sector. In any case, the sector has got a respite that should be utilised well to slim down debt, improve capex and technology, and to adopt a sustainable business model. The government may have to do more to ensure that the sector remains competitive and is not reduced to a duopoly. </p>.<p><strong>Check out latest videos from <i data-stringify-type="italic">DH</i>:</strong></p>
