New Telecom Bill may Address Insolvency Criteria for Troubled Companies

Under the current Insolvency and Bankruptcy Code (IBC) rules, it is unclear whether the spectrum owned by defaulting telecom operators belongs to the government or banks.

Highlights

  • It is predicted that the projected Indian Telecommunication Bill, 2022, will bring about changes that will make it simpler to deal with stressed assets' insolvency and mergers and acquisitions (M&A).
  • The spectrum is a public resource that must go to the centre, according to earlier statements from the Department of Telecommunications (DoT).
  • The law is also likely to establish a framework for managing telcos' financial pressure.

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Telecom Bill

It is predicted that the projected Indian Telecommunication Bill, 2022, will bring about changes that will make it simpler to deal with stressed assets' insolvency and mergers and acquisitions (M&A). As per BusinessLine report, it will also permit the center to settle the liabilities of suffering operators.

Comprehensive Information on the New Telecom Bill

Under the current Insolvency and Bankruptcy Code (IBC) rules, it is unclear whether the spectrum owned by defaulting telecom operators belongs to the government or banks. Through the new bill, according to BL, the government will acquire ownership of this spectrum. The spectrum is a public resource that must go to the centre, according to earlier statements from the Department of Telecommunications (DoT).

According to the new regulations, the telecom operator will keep onto the spectrum as long as it keeps up its delivery of services and payment of fees. The government will become the owner of the spectrum once the service is terminated.

The law is also likely to establish a framework for managing telcos' financial pressure. To maintain competition, it will empower the centre the ability to convert dues into equity, suspend, or even write off dues. Further, the bill will modify the telcos' M&A procedures. After the bill is passed, the operators will only be obliged to provide notice before participating in such agreements.

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Bhavya is very keen on learning about developments that take place in the tech and telecom industry. She is also someone whom you can sit with and talk about all the Netflix movies and series on science fiction.

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