Telcos likely to get moratorium of 4 years for AGR dues: Report

The Union Cabinet on Wednesday approved a moratorium on payment of spectrum dues by telecom firms as part of a package for the sector aimed at giving relief to companies such as Vodafone Idea that have to pay thousands of crores of rupees in unprovisioned past statutory dues, said news reports.

Cabinet has approved moratorium of 4 years for AGR dues, the reports states. There is also a component of equity-related conversion in the relief package, which will offer a gesture of goodwill and help companies raise funds, say reports.

The move will come six weeks after billionaire Kumar Mangalam Birla resigned as chairman of beleaguered Vodafone Idea Ltd (VIL) on August 4.

VIL’s August 4 intimation about the top-level changes had come on a day stock exchanges seeking clarification from the company over the widely reported June 7 letter of Birla to the Cabinet Secretary offering his stake in Vodafone Idea to the government or any company approved by the government for free.

VIL, which was created from the merger of British telecom giant Vodafone’s India unit and Birla’s Idea Cellular Ltd, has to pay about Rs 50,399.63 crore in statutory dues dating back over past many years.

The package, which initially was widely expected to be taken up by the Cabinet last week, will offer a breather to the three private player industry, at a time when VIL is confronting existential crisis.

The Union Cabinet is also likely to approve on Wednesday the revised production-linked incentive (PLI) scheme for the automobile sector, which aims at promoting domestic manufacturing and create jobs, according to sources, reported PTI.

The government is believed to have slashed the outlay for this PLI scheme to about Rs 26,000 crore, they said.

Last year, the government had announced the scheme for the automobile and auto components sector with an outlay of Rs 57,043 crore, earmarked for five years.

The sources did not disclose the reason for revising the scheme to Rs 25,938 crore, but stated that the focus is now more on battery electric and hydrogen fuel cell vehicles.

Vodafone Idea, in its annual report, has flagged the industry’s “unsustainable financial duress” and hoped that the government would provide the necessary support to address “all structural issues” faced by the sector.

The total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30, 2021 of VIL stood at Rs 1,91,590 crore, comprising of deferred spectrum payment obligations of Rs 1,06,010 crore and adjusted gross revenue (AGR) liability of Rs 62,180 crore that are due to the government.

Industry analysts too have been sounding an alarm over the risks of the Indian telecom market turning into a duopoly.

Apex association COAI recently made a strong pitch for cut in levies, doubling tenure of auctioned radiowave holdings, along with 7-10 year moratorium for spectrum payments, to address viability concerns of the sector.

Last month, Sunil Mittal, Chairman of India’s second largest telecom company Bharti Airtel, had made a passionate pitch for hike in tariffs and a cut in government levies to save the industry.

Mittal had said while 35 per cent of industry’s revenue goes to the government in taxes and levies, telcos are loaded with an extraordinary debt of AGR (Adjusted Gross Revenue) dues and spectrum payments.

Levies are far too high in the telecom sector, Mittal had said adding that “levies and load on industry needs to be brought down” for India to truly realise its digital vision.