September 28, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

No immediate relief for financially ailing Telecom Sector from government: Sources

New Delhi: There seems to be no immediate relief for the financially ailing Telecom Sector as the relief being planned by the government doesn’t include short term measures. The only saving grace for the industry is the redefinition of Adjusted Gross Revenue (AGR). According to sources, once AGR is defined then only telecom activity-based revenue will come under AGR.

Government is unlikely to reduce or waive Telcos on existing dues ie. AGR, interest, penalty and interest on the penalty that was upheld by Supreme Court in its September 2020 Judgment. The proposed interest rate reduction and penalty removal on overdue will only be applicable for dues of future periods after a prospective date to be notified. 

Government is likely to defer dues for the next 4 years, but instalments will have to be paid after 5 years. The government is unlikely to extend 10 year period as ordered by the apex court, sources told Zee Media.

There will be no waiver of interest on installments of the next 4 years for past AGR dues or any relief on payment instalments for past spectrum already acquired by telcos. However, NPV will be fully protected. 

As far as equity conversion is concerned, Telcos will have an option, within a specified timeframe, to convert only the additional Govt. dues on account of NPV interest Protection into equity. 

This amount has been quantified in the proposal approximately Rs 16,000 cr for Vodafone Idea, Rs 9,500 cr for Bharti Airtel, Rs 3,000 cr for Reliance Jio & Rs 1,500 cr for Tata Teleservices. 

There is no immediate relief for the industry on Spectrum Usage Charges front or Bank guarantees. The proposal says SUC will be scrapped only for spectrum acquired in future auctions. There is likely no relief on the levy on revenues from the existing spectrum.

As per sources, there is no immediate on Bank Guarantees (BGs), as existing BGs for securitisation of payment instalments of past auctions, and those relating to disputed demands covered by Court orders, already held with DoT will not be returned or reduced. 

The only saving grace for the sector is a redefinition of AGR. It will not be payable on non-telecom revenues such as interest, dividends, capital gains, sources added.

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