The widely anticipated telecom package from the government likely will grant most relief prospectively and spectrum usage charges (SUC), bank guarantee cuts are unlikely for existing spectrum dues, CNBC-TV18 has learned from sources. The key takeaway is: more often than not the reliefs that are under consideration are designed to provide the relief prospectively and there is very limited relief coming by way of the current spectrum dues.
As far as the relief is being considered, CNBC-TV18 has learned that the government is considering allowing a moratorium of sorts as far as spectrum dues are concerned for four years. However, the government is likely to balance that moratorium period that has been provided by shifting those dues for the four years in question to the remaining installments including interest with additional interest.
It is this additional interest to be levied on moratorium dues that the government is considering right now of converting into equity. And that is not going to be a simple exercise.
There are listed entities, there are unlisted entities, there are concerns with respect to the finance ministry, with respect to Securities and Exchange Board of India (SEBI), market regulations. This is going to be a complicated exercise but nonetheless what is under consideration right now within the government is converting the interest on the moratorium dues to equity.
The government, to preserve its dues, is also considering perhaps providing for an option that would allow the government to have cumulative redeemable preference share. That is one aspect under consideration.
In terms of prospective relief, SUC cut is under consideration but that will be done prospectively for spectrum to be acquired in future options.
Similar is with bank guarantees - bank guarantee requirement is likely to be eased. However, that again will be for future not for the current bank guarantees that have already been furnished before the Department of Telecom (DoT).
It is also understood that the AGR definition is likely to be revised to ensure that it accounts only for telecom-based activities but that again will be done prospectively not with retrospect, not with respect to the AGR dues that are currently facing Vodafone Idea and Bharti Airtel. So, a large chunk of this relief is likely to be providing relief for future dues, for future spectrum.
As far as current dues are concerned, possibly a small moratorium but that is likely to be balanced with future installments with interest as well.
Watch the accompanying video of CNBC-TV18’s Ashmit Kumar for more details.