Government says taken several steps to help telcos, consumers

The government said it has several steps to protect the interests of telcos and consumers, including 100% FDI, a two-year moratorium on spectrum payments, more time to pay for airwaves bought in auctions and mandating the sector regulator to ensure service quality.

These were outlined by minister of state for communications Devusinh Chauhan in Rajya Sabha Thursday, in response to a law maker’s query on whether the strategically important telecom industry was heading for a duopoly in the backdrop of reduced number of effective operators.

Though Chauhan didn’t directly answer the query, he shared some measures taken by the government in recent times to keep the telecom sector in shape.

He told Parliament that among key enabling steps, “the government had placed a cap on total spectrum holding of a service provider in a licensed service area to a maximum of 35% of total available spectrum” to ensure spectrum assets “can’t be monopolised by a service provider even through merger and acquisition”.

He added that options had been given to telcos to also “defer spectrum auction payment installments for two years (2020-21 and 2021-22)” and that they had been allowed to avail of a higher number of installments (maximum 16) towards meeting deferred spectrum payment liabilities for airwaves bought in auctions.

Among other steps, he said, the government had also framed Right of Way (RoW) Rules, 2016, to facilitate proliferation of telecom networks, especially by making the process of obtaining RoW permissions time-bound and transparent.

Separately, he said, the Supreme Court had allowed the impacted telcos to clear their pending adjusted gross revenue (AGR) dues to the government in 10 annual instalments.

The minister noted that currently, Reliance Jio has a 36.15% share of the mobile services market followed by Bharti Airtel with 29.83%, Vodafone Idea with 23.83% and state-run Bharat Sanchar Nigam Ltd.-Mahanagar Telephone Nigam Ltd. with 10.2%.

Incidentally, the law maker’s query in Parliament came just days after Deutsche Bank in a research note said that despite all the talk of the Indian government wanting three private players, there was “insufficient action to take that claim very seriously”.

Analysts have warned that Vodafone Idea (Vi) may be bound for the bankruptcy court, a scenario that would reduce the telecom sector to a duopoly, especially as the loss-making telco’s legal options for any further recourse on the AGR front appear to have almost run out after the nation’s top court denied it any relief on the statutory dues front.

Vi, hit hardest by the apex court ruling, faces dues of Rs 58,254 crore as calculated by the government. It has paid only Rs 7,854 crore and needs to clear the rest in 10 instalments through March 31, 2031. Analysts have pointed out that Vi’s cash flows are likely to fall short by at least $3.1 billion (Rs 23,500 crore) in FY2023, due to a host of stiff upcoming payment obligations.