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Govt forms panel to look into financial woes of telcos after SC's AGR blow

The panel may soon announce a financial bailout package for the ailing sector by lowering spectrum charges and ending the era of free mobile phone calls and dirt cheap data

twitter-logo BusinessToday.In   New Delhi     Last Updated: October 30, 2019  | 13:10 IST
Govt forms panel to look into financial woes of telcos after SC's AGR blow
The SC recently asked telcos to pay up Rs 92,641 crore to the DoT over the 16-year-old AGR dispute.

The Modi government has formed a Committee of Secretaries (CoS) to find out ways to reduce financial stress in the telecom sector. The panel, formed under Cabinet Secretary Rajiv Gauba, will suggest ways to make a favourable environment for investment in the sector struggling to keep up revenue. The committee may soon announce a financial bailout package for the ailing sector by lowering spectrum charges and ending the era of free mobile phone calls and dirt cheap data.

Reports say the panel has been asked to examine "all aspects" of "financial stress" faced by service providers such as Bharti Airtel and Vodafone-Idea and suggest measures to mitigate them. The CoS, which will comprise Secretaries to the ministries of finance, law, and telecom, will also look into other issues such as delay in spectrum auction payment dues for FY21 and FY22 and telcos' long-pending demands of a reduction in spectrum usage charges and universal service obligation fund levy. Telecom Regulatory Authority of India (TRAI) may also look into the demand for a reduction in the minimum charge (floor tariff) for voice and data services.

The government's decision to form a committee comes a few days after the Supreme Court upheld the Department of Telecom's definition of Adjusted Gross Revenue, basis which it calculates levies. The apex court also asked telcos to pay up Rs 92,641 crore to the DoT over the 16-year-old AGR dispute, which could impair the financial situation of incumbents battling the prolonged tariff wars and high-debt burden.

On Tuesday, an unsigned paper seeking a waiver of interest and penalties on the unpaid amount, as well as staggering payment of principal licence fee over 10 years , was submitted to the DoT. Bharti Airtel Chairman Sunil Bharti Mittal and his brother Rajan Mittal had also met Telecom Minister Ravi Shankar Prasad and Telecom Secretary Anshu Prakash on October 28.

After the SC verdict, Airtel had to postpone its second-quarter results till November 14. "The company is approaching DoT to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome," Airtel said in a statement. Airtel will have to shell out about 23.4 per cent (Rs 21,682 crore) of the disputed amount while Vodafone Idea's payout will be much bigger at 30.55 per cent (Rs 28,308 crore).

Meanwhile, Industry body COAI has welcomed the constitution of the CoS, saying the panel must work out a relief package within 60 days. India perhaps has the cheapest data cost in the world with Rs 8 per GB charge. Intense competition has meant that the average revenue per user (ARPU) per month has declined from Rs 174 in the year 2014-15 to Rs 113 in 2018-19. It is also estimated that a subscriber on an average uses 10GB of data and 700 minutes mobile talk time per month.

Edited by Manoj Sharma with PTI inputs

Also read: Big blow to Airtel, Vodafone Idea! SC order on AGR definition puts Rs 92,000 crore burden on telcos

Also read: Immediate payment of DoT dues to limit telcos' 5G bids: Fitch Ratings

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