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Two-year moratorium for spectrum dues to provide relief to telecom sector: COAI
Nov-21-2019

Cellular Operators Association of India (COAI) Director General Rajan Mathews has said that the combination of three things -- two-year moratorium for telecom companies to pay their spectrum dues, proposed tariff hikes in mobile phone call and data charges and modifying adjusted gross revenue will provide a relief to debt-laden telecom sector. However, he said the deferred payment will be adjusted in balance annual instalments to be paid by the service providers for spectrum they purchased through auctions.

Mathews has said that as per legal opinion given by legal stalwarts that DoT is well within its right to modify definition of AGR prospectively. He also said the AGR judgement of the Supreme Court has added debt burden on another Rs 2 lakh crore on the telecom sector. He said “If the government removes AGR prospectively, as we pay for entire spectrum in auction, or modifies it as per TDSAT judgement, it will resolve telecom sector issues.” He noted the telcos pay up to 30 percent of their revenues to the government, by way of various levies and taxes, which is an enormous burden on the industry. He stated that “we have been requesting the government that these levies and Taxes be rationalised and the same is also one of the important goals of NDCP. However, these aspects of the NDCP are yet to be operationalised and we are engaging with the government on the same.”

Director General further said that the 2-year moratorium will not reduce debt on the telecom sector as government will charge interest on the deferred payments. He said it will help industry if government aligns interest with prime lending rate or floating method instead of fixed rate of 9.5 percent. He noted that the interest rates have been coming down. Adding further, he said the debt on telecom service providers at present is close to Rs 6 lakh crore and telecom operators will need to increase their average revenue per user by at least 20 percent for partial relief.

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