Telecom sector reforms ensure industry is able to invest fearlessly: Mittal

Telecom operator Bharti Airtel Chairman Sunil Mittal on Wednesday said the telecom sector reforms approved by the Cabinet will ensure that the industry is able to invest fearlessly, and the company will respond to Prime Minister Narendra Modi's call to invest and accelerate the country's growth.

Among a series of breathers for the stressed telecom sector, the Cabinet has approved the inclusion of revenues earned only from telecom services in the adjusted gross revenue (AGR), and the removal of penalty on dues to be paid to the government prospectively.

Mittal congratulated and thanked the government for undertaking these seminal reforms to lift an industry that is at the core of his Digital India vision. "The latest reforms ensure that the industry is able to invest fearlessly and support India's digital ambitions. We also compliment the Minister of Communications and the Finance Minister for their leadership and support," Mittal said in a statement.

The government on Wednesday also gave a four-year moratorium to pay government dues but with interest.

"Bharti Airtel is fully committed to responding to the call by the Prime Minister to invest in and accelerate India's growth. What lies ahead is a once-in-a-lifetime opportunity to build the digital infrastructure that is a catalyst for the digital aspirations of over one billion Indians," Mittal said.

Bharti Airtel said the reform package heralds a new dawn for the Indian telecom industry and will catalyse explosive growth of this vital sector.

He further said the reforms pave the way for a sustainable three private plus one state-owned telecom operator structure to serve a large market like India.

"These bold initiatives are reminiscent of the decisions taken by the NDA government in 1999 when the telecom sector was at a crossroads which resulted in an era of affordable mobile services for all Indians," Airtel said.

From October, delayed payments of licence fee and spectrum usage charge will attract an interest rate of State Bank of Inda's MCLR plus two per cent, instead of MCLR plus four per cent, compounded annually instead of monthly.

MCLR stands for marginal cost of funds-based lending rate.

The government has prospectively removed penalty and interest on penalty on delay in payment of government dues. This provision has led to telecom operators bleeding after the Supreme Court decision upholding the government's view on AGR definition.

The Cabinet eased customer acquisition norms for telecom operators by replacing the need to fill physical forms with digital forms.

"These fresh reforms will further boost our efforts to invest in this exciting digital future and enable us to be one of the leading players in India's digital economy. More needs to be done, however, towards a sustainable tariff regime to ensure the industry gets a fair return.

"This will, in turn, allow it to continue investing in new technologies and innovation to bring world-class services to customers," Bharti Airtel India and South Asia MD and CEO Gopal Vittal said.

Telecom Minister Ashwini Vaishnaw said that as part of the reforms in the telecom sector, the Cabinet has allowed a four-year moratorium on all dues that telecom operators have to pay to the government, including annual payments of dues arising out of the AGR judgment and spectrum purchased in past auctions excluding the March 2021 auction.

The government has given the option to telecom operators to pay the interest amount arising due to deferment of payment by way of equity.

The minister said 100 per cent FDI (foreign direct investment) in telecom via the automatic route was approved by the Cabinet. Earlier, automatic investment routes were limited to 49 per cent level, and approval from concerned authorities was required for foreign investment beyond 49 per cent level.

The Cabinet has approved the allocation of spectrum through an auction for a period of 30 years, compared with the 20-year period prevalent at present. Also, telecom operators will be allowed to surrender the spectrum that will be acquired in future auctions after 10 years of the lock-in period. There will be no spectrum usage charges levied for spectrum acquired in future auctions.