Friday, Oct 07, 2022
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Telecom Reforms: Cabinet Approves 4-Year-Moratorium To Telcos For Payment Of Dues, 100% FDI

In big bang reforms, the Union Cabinet on Wednesday approved a relief package for the telecom sector that includes a four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100 per cent foreign investment through the automatic route.

Telecom reforms bring relief to telcos

The Union Cabinet on Wednesday approved a four-year moratorium on payment of statutory dues by telecom companies (telcos). Telecom minister Ashwini Vaishnav said that the telcos will pay interest on the moratorium period.

 

The Union cabinet has also allowed 100 per cent foreign direct investment (FDI) in the telecom sector with safeguards. Vaishnav said that the Cabinet is rationalising aggregated gross revenue (AGR) definition, excluding non-telecom revenue of telcos from payment of statutory levies. AGR refers to revenues that are considered for payment of statutory dues.

 

As part of the relief package, the telecos could opt to convert the interest due on their spectrum amounting to four-year moratorium, to government equity. The package comes as a relief to the struggling telecom sector that is going through a financial crunch.

 

The move is meant to bring relief to companies like Vodafone Idea, which owe large sums to the government. In October 2019, the Supreme Court had asked telecom operators pay Rs 1,19,292 crore worth of AGR dues to the telecom ministry. Bharti Airtel’s dues are estimated to be Rs 43,980 crore, while Vodafone Idea’s were Rs 58,254 crore.

 

These measures are expected to ease the cash flow issues being faced by some players in the industry.

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