After a long wait, there is good news for telecom operators as the cabinet has approved to provide them with a relief package. With this, it intends to maintain a three-private player market, offering them the option to convert a part of their dues into equity towards the government and some part after a period of four years.
Telecom Operators’ Relief Package
As per ET Telecom citing people familiar with the development, the cabinet approved the proposals sought after by the Department of Telecommunications (DoT). This package will likely include a moratorium on AGR and spectrum payments for four years besides a reduction in the spectrum usage charge (SUC). These are among the measures taken to enhance the health of the telecom sector that is debt-laden. Also, it will retain a three-private player market.
Furthermore, other important proposals include the redefining of AGR that will exclude non-telecom items, a reduction in the bank guarantees, and more that will let telecom operators surrender the unused spectrum. As per sources, the central government has let telecom operators convert a segment of their statutory dues in government’s equity right away.
Within the four-year time period, if any telecom company sees improvements in its operational performance but struggles due to the payment of its dues, then the government might consider the option of converting the principal amount of the same into equity.
Vodafone Idea Receives Help
In the afternoon trade on Wednesday, the shares of Vi were trading at Rs 8.83, which is 1.6 per cent higher while Bharti Airtel was trading at 5.1 per cent higher at Rs 729.90 on BSE.
In the April-June earnings report, which is the first quarter of the financial year 2021-22, Vodafone Idea stated that the total gross debt was Rs 1.92 lakh crore as of June 30, 2021. This comprises deferred spectrum payment obligations of Rs 1.06 lakh crore alongside AGR liability of Rs 62.180 crore due to the government and the debt of Rs 23,400 crore from financial institutions and banks. Notably, the cash and cash equivalents accounted to Rs 920 crore and the net debt was valued at Rs 1.91 lakh crore.