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Saturday, September 25, 2021

Govt bails out telcos with 4-year gap in spectrum, AGR payouts – Times of India

NEW DELHI: The Union Cabinet on Wednesday cleared a reform-oriented bailout package deal for the beleaguered telecom trade – liberating up money for the financially stretched corporations by throwing in a 4-yr moratorium on spectrum and AGR funds, whereas additionally slashing expenses and providing a lenient definition of income recognition to hasten the transition in the direction of 5G.
The transfer, which was anticipated after Vodafone Idea appeared headed in the direction of chapter, will profit all gamers, together with Bharti Airtel and Reliance Jio. It had been in the works for the previous few months however was expedited as then Vodafone Idea chairman Kumar Mangalam Birla nearly threw in the towel amid mounting losses and heavy debt. was the primary to report on the sequence of aid measures.
Telecom minister Ashwini Vaishnaw mentioned the “structural reforms” for the sector had been income impartial – since curiosity will probably be charged put up-moratorium – and have been authorized to make sure enough competitors in the sector.
The authorities determined to take away non-telecom revenues from the AGR definition, which is able to save tax outgo on spectrum utilization cost and licence price in the long run. It additionally minimize the financial institution assure mandate in opposition to licence price and different related expenses by 80% and mentioned there will probably be no requirement for a number of financial institution ensures in completely different service areas.
The curiosity charged for delayed funds was additionally diminished, and penalties had been eliminated. The measures are prone to go away enough money in the palms of the trade to tide over their monetary woes.
The authorities has additionally saved the choice to transform a portion of the curiosity burden into fairness if the necessity arises on the finish of the moratorium .
And, to encourage the businesses to maneuver in the direction of 5G, the federal government introduced a sequence of positives which ought to make the trade migrate to the subsequent-gen telecom know-how. These embody rising the tenure of spectrum holdings by a big 10 years — elevating it to 30 years from the present 20 years.
Surrender of spectrum will probably be permitted after 10 years for spectrum acquired in the long run, whereas the federal government additionally mentioned that it’ll not cost any SUC in the long run. It additionally additional liberalised overseas funding inflows in the sector, permitting 100% FDI below the automated route.
However, it remained cautious over investments coming in from China and nations that share a land border with India, saying they might be scrutinised.

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