Telecom sector woes: Inter-ministerial group to submit report by tomorrow

The telcos could be given 16 years instead of 10 years for deferred spectrum payment

The inter-ministerial group looking into telcos' financial stress is expected to submit its report by tomorrow, a top government official said today.

The Telecom Commission will consider the panel's report in its meeting on September 8,DoT Secretary Aruna Sundararajan said.

The IMG was constituted earlier this year to suggest measures to mitigate financial difficulties of telecom sector, which is reeling under Rs 4.6 lakh crore of cumulative debt and is facing severe pressure on revenue and profitability.

"I am sure the IMG is proposing some relief ... We expect their report to be submitted today or tomorrow," Sundararajan told reporters on the sidelines of an event by the Centre for Development of Telematics (C-DoT) here.

Once submitted, the IMG report will be placed before the Telecom Commission for its consideration, the Telecom Secretary said further.

"The Telecom Commission will take it up in coming days...The next meeting of the Telecom Commission is on September 8," she added.

The inter-ministerial group is learnt to be favouring increasing the timeline for deferred spectrum payment for telcos, andshifting from PLR to MCLR for interest and penalty payments with regard to licence fee and spectrum usage charges.

Currently, a portion of spectrum auction amount is taken as upfront payment by theDepartment of Telecom(DoT) and the balance after a two-year moratorium is paid out every year in 10 instalments.

There are indications that the telcos could be given 16 years instead of 10 years for such deferred spectrum payment.

The IMG which comprises senior officials from ministries of finance and communications has, over the last three months, beendeliberatingon various steps that can be taken to address the financial woes of the industry.

In June, it had held extensive discussions with all telecom players and large banks on the industry's financial stress.

Established telecom operators have been flagging pressure on profitability and revenue, and have blamed competition intensified by the entry ofReliance Jiofor their woes.

Vodafone Group CEO Vittorio Colao, has recently written to the Telecom Minister Manoj Sinha expressing hope that IMG willrecommend "a reduction in theinterest rates for deferred spectrum payments to 6.25 per cent in line with the improved macroeconomic trends and an increase in the period of payment for spectrum".

The Vodafone top honcho, in the letter dated August 22,had also rued the deterioratingfinancial position over the last 9-12 months due to "unchecked price competition with services offered below cost for considerableperiods of time".