DoT tells Airtel, Voda Idea, Jio to decide on AGR moratorium in 10 days

Bharti Airtel, Vodafone Idea, and Reliance Jio get 3 months to inform DoT on equity conversion

The Department of Telecommunications (DoT) has asked Bharti Airtel, Vodafone Idea and Reliance Jio to inform the government by October 29 whether they would opt for the four-year moratorium on adjusted gross revenue- (AGR-) related dues, which is part of the relief package approved last month.
 
Further, three months have been given to service providers to respond on whether they would choose the option of converting accrued interest due to the deferred payments into equity. Companies opting for the moratorium proposal will have to furnish their audited financial statements.
 
On September 15, the Union Cabinet approved a relief package for the telecom sector, which included a four-year moratorium on AGR and spectrum payments, reduced bank guarantees and the option of converting operators’ principle statutory dues owing to the deferred payment into equity at the end of the moratorium period — or after four years.
 
The relief package is expected to give a boost to current players, besides attracting international investment, for which 100 per cent foreign direct investment (FDI) under the automatic route has been permitted in the telecom sector, with all safeguards.

The government hopes that the measures, which would be applicable for the telecom service providers, would provide relief by easing liquidity and cash flows and help banks having substantial exposures to the sector.
 
The moratorium, applicable from October 1, 2021, is an optional scheme and the company that decides to avail of it will pay interest at the rate of the marginal cost of funds-based lending rate (MCLR), plus 2 per cent. MCLR is the minimum lending rate for banks.

 A moratorium of up to four years in annual payments will be protecting the net present value (NPV) of the dues.
 
The deferment is on payments of spectrum purchased in past auctions — excluding the auction of 2021 —  for up to four years with the NPV protected at the interest rate stipulated in respective auctions.
 
The companies will make the necessary payments after the end of the moratorium period, or the government can exercise the option to convert the amount pertaining to the deferred payment into equity. This will be finalised by the Ministry of Finance.
 
Currently, 49 per cent FDI is allowed under the automatic route, while the other conditions remain the same. FDI is allowed for countries permitted by the central government to invest in India.