Report Wire - Cabinet approves aid bundle for telecom sector: Key factors to notice

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Cabinet approves aid bundle for telecom sector: Key factors to notice

3 min read
telecom relief package, telecom sector relief

In a bid to offer aid to the harassed telecom sector, the federal government on Wednesday introduced an important aid bundle with a string of reforms which is anticipated to assist the struggling incumbent operators reminiscent of Vodafone Idea (Vi) and Bharti Airtel.
The transfer comes simply weeks after billionaire Kumar Mangalam Birla resigned as chairman of Vodafone Idea (Vi) on August 4.
Addressing the media after the Cabinet assembly, Telecom Minister Ashwini Vaishnaw mentioned that 9 structural reforms of the harassed sector had been authorized within the assembly. These are geared toward fostering wholesome competitors within the sector to offer option to prospects and pave the best way for the entry of recent gamers.
We check out all the important thing aid measures introduced in as we speak’s briefing:
1. Four-year moratorium on cost of statutory dues by telcos
The Cabinet authorized a four-year moratorium on cost of the spectrum dues of telecom service suppliers (TSPs). However, these TSPs choosing the moratorium will likely be required to pay curiosity on the quantity availed below the profit.
“The telecom relief package is revenue neutral for the government,” the minister mentioned.
2. Rationalisation of Adjusted Gross Revenue (AGR)
The authorities has excluded non-telecom revenues from the definition of AGR prospectively. Telecom firms need to pay a pre-fixed proportion of AGR to the federal government as statutory levies however this may apply prospectively.
“All non-telecom revenue will be removed from the AGR,” the minister mentioned whereas addressing the media.
3. 100% FDI by way of automated route authorized
The Cabinet allowed 100 per cent international direct funding (FDI) with safeguards within the telecom sector below the automated route.
Till now, solely 49 per cent was allowed by way of automated route and something above that needed to essentially undergo the federal government route.
These measures are prone to ease the money stream considerations being confronted by some telecom gamers within the business.
4. Interest charges rationalized/ penalties eliminated
The curiosity which is compounded month-to-month on the spectrum utilization costs (SUC) will now be compounded yearly and in addition the rate of interest will likely be lowed, based mostly on SBI’s MCLR + 2 per cent as a substitute of MCLR plus 4 per cent. Additionally, the penalty and curiosity on penalty stand eliminated.
5. Spectrum tenure hiked to 30 years
The future spectrum auctions will likely be performed for a interval of 30 years as a substitute of the present 20 years. Apart from this, a telco will likely be allowed to give up its spectrum after finishing a 10-year lock-in interval from the date of buy.
6. Spectrum sharing made free
Spectrum sharing is being inspired and the extra SUC of 0.5 per cent for spectrum sharing is eliminated.
7. Fixed calendar for spectrum public sale
Spectrum auctions will likely be usually held within the final quarter of each monetary yr.
8. KYC reforms
App-based self-KYC will likely be permitted and the e-KYC charge revised to solely Re 1. Switching from pay as you go to postpaid and vice-versa is not going to require a recent KYC.
9. Customer Acquisition Forms to be saved digitally
Paper Customer Acquisition Forms (CAF) will likely be changed by digital storage of knowledge. Nearly 300-400 crore paper CAFs mendacity in numerous warehouses of TSPs is not going to be required. Warehouse audit of CAF is not going to be required.