Today, the Union Cabinet may consider a moratorium on payment of spectrum dues by telecom firms as part of a package for the sector. It is aimed to provide relief to companies like Vodafone Idea that have to pay thousands of crores of rupees in unprovisioned past statutory dues.
As per sources with the knowledge of the development said that the relief package which is under consideration includes telecom firms getting an option to convert interest on spectrum dues of the four-year moratorium period into government equity.
The move comes six weeks after billionaire Kumar Mangalam Birla resigned as chairman of beleaguered Vodafone Idea Ltd (VIL) on August 4.
VIL’s August 4 intimation about the top-level changes had come on a day stock exchanges seeking clarification from the company over the widely reported June 7 letter of Birla to the Cabinet Secretary offering his stake in Vodafone Idea to the government or any company approved by the government for free.
Vodafone Idea has to pay about ₹50,399.63 crore in statutory dues dating back over the past many years.
Some within the government are, however, questioning using taxpayer money to bailout telcos who had failed to provision for statutory dues during the pendency of legal cases.
The relief package will bring reforms in the telecom sector by way of granting moratorium on unpaid dues, redefining AGR (Adjusted Gross Revenue) prospectively and cutting Spectrum Usage Charges, a source said.
The package, which initially was widely expected to be taken up by the Cabinet last week, will offer a breather to the three private player industry, at a time when Vodafone Idea is confronting existential crisis.
Sources said that the measures will be prospective, and will pave the way for reforms in the sector.
Among the measures being discussed are a four-year moratorium on payments, AGR and spectrum, redefinition of AGR to exclude non-telecom items, and a cut in SUC, sources said, adding that these concrete measures are expected to ease the cash flow issues being faced by some players in the industry.
The steps being deliberated will offer immediate relief to the sector, they said adding that there is also a component of equity-related conversion, that is being mulled, which, if accepted, will offer a gesture of goodwill and help companies raise funds.
