Modi govt to meet with telecom firms from Monday

As telecom operators meet the government and sectoral regulator next week amid the problem of financial stress, the industry is likely to press for key demands like reduction of levies, lower goods and services tax rate and ease of doing business.

The meetings will kick off from Monday when the inter-ministerial group (IMG), which was formed to resolve the financial stress of the sector, will meet representatives from Reliance Communications, Tata Teleservices, Aircel, and MTS. The panel will meet Airtel, Vodafone, Idea Cellular and Reliance Jio executives on Thursday. On the same day, Telecom Regulatory Authority of India (Trai) chairman R S Sharma will meet the chief executives of the telecom companies. IMG will meet state-run BSNL (Bharat Sanchar Nigam Limited) and MTNL (Mahanagar Telephone Nigam Ltd) on June 17 (Saturday).

Sources said after the meetings of government and industry officials, telecom minister Manoj Sinha will meet the promoters of telecom firms on June 22. Till now, Bharti Enterprises founder and chairman Sunil Mittal, Reliance Group chairman Anil Ambani, Aditya Birla Group chairman Kumar Mangalam Birla and Tata Sons chairman N Chandrasekaran have confirmed their presence for the meeting.

The sources added that the promoters will also be meeting finance minister Arun Jaitley on the same day to deliberate possible solutions for telecom sector woes.

The government machinery has become active after reports of financial stress in the telecom sector. In April, Reserve Bank of India had asked banks to set aside higher provisioning for the telecom sector. Another development that has brought the telecom crisis centre stage is the fact that Reliance Communications (R-Com) has defaulted on its payments.

Going by telecom operators, the industry pays around 30 per cent of its earnings in taxes and levies, including spectrum usage charge and licence fees. Due to a number of reasons, including hyper-competitiveness, the sector has come to a point that can be seen as just short of needing a bail-out. Total debt for the sector is around Rs 4.5 lakh crore, while revenues are around half this. Despite this, tariffs have been going in the opposite direction of inflation.

The industry had earlier also written to the telecom department, telling it about the financial situation.

What telecom industry wants

* Reduce spectrum usage charge to 1% 

* Reduce licence fee to 3% in a phased manner (with aim of doing away with the levy in 2-3 years)

* Redefine adjusted gross revenue (AGR) in line with regulator's recommendations

* Lower GST rate to 5% as telecom is essential service

* Valuation of pre-paid vouchers be done on MRP basis

* Distribution chains to be exempted from GST, like the current service tax regime

* Carry forward Cenvat credit of service tax paid on spectrum

* Formulation of telecom entity to provide loans at preferred rates

* Ease of doing business

List of likely attendees
 

Telecom minister Manoj Sinha will meet the leaders of telecom firms on June 22. Bharti Enterprises chairman Sunil Mittal, Reliance Group chairman Anil Ambani, Aditya Birla Group chairman Kumar Mangalam Birla and Tata Sons chairman N Chandrasekaran have confirmed their presence