The Cabinet has decided to defer receipt of spectrum auction instalment due from telecom service providers for the years 2020-2021 and 2021-2022. The move will be beneficial for incumbents like Vodafone Idea and Bharti Airtel who reported massive losses for Q2 after the SC asked the companies to pay Rs 92,000 crore to the government as Adjusted Gross Revenue (AGR). The Union Cabinet has taken crucial decisions on other vital subjects as well. Here are the details:
Finance Minister Nirmala Sitharaman announced on Wednesday night that the government has decided to grant a 2-year moratorium for telecom companies to pay their spectrum dues.
The FM said that the committee of secretaries looked into issues in the telecom sector exhaustively. The government subsequently decided to defer receipt of spectrum auction instalment due from TSPs (telecom service providers) for years 2020-2021 & 2021-2022.
The finance minister in the press conference said, "In view of current financial stress faced by major telecom service providers & pursuant to recommendations by CoS,
The finance minister further elaborated that the deferred amounts of spectrum fees due from telcos will be equally spread over the remaining installments.
She said, "These deferred amounts will be equally spread over the remaining installments to be paid by the TSPs without any increase in the existing time period specified for making the installments payments. The interest as stipulated while auctioning of the concerned spectrum will, however, be charged so that NPV of the payable amount is protected.”
This move will be beneficial for incumbents like Vodafone Idea and Bharti Airtel who reported a combined loss of Rs 74,000 crore for its second quarter ended September 30, 2019 results after the Supreme Court asked telecom companies to pay Rs 92,000 crore to the government as Adjusted Gross Revenue (AGR).