September 19, 2021

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4-year relief on AGR dues: Cabinet’s big bang telecom reforms

NEW DELHI: In a much-needed relief for the cash-strapped telecom sector, the Union Cabinet on Wednesday approved a 4 year moratorium period on dues and rationalised the definition of adjusted gross revenue (AGR).
The announcement comes as a big relief to companies like Vodafone Idea which had to pay thousands of crores to the Centre in unprovisioned past statutory dues.
Briefing the media after the Union Cabinet meeting, telecom minister Ashwani Vaishnaw said that the reforms will change the framework of the entire telecom sector and broaden the industry.
The relief measures include the following:
* Four-year moratorium on payment of statutory dues by telecom companies, both AGR and spectrum charges
* Definition of AGR has been rationalised by excluding non-telecom revenue of telecom companies
* 100 per cent FDI (foreign direct investment) in telecom via the automatic route has been approved
* The regime of heavy interest, penalty and interest on penalty on payment of licence fees, spectrum charges and all kinds of charges has been rationalised .
* The Centre will do annual compounding of interest instead of the monthly compounding.
* Spectrum auction will be done for 30 years, instead of 20 years. After completing 10-years lock-in period, the buyer will have the option to surrender by paying surrender charges.
* Spectrum sharing has been completely allowed and made free.
The move comes as a relief for debt-ridden Vodafone Idea which has already paid the government Rs 7,854 crore ($1.07 billion) in telecoms dues, but still owes roughly Rs 50,000 crore.
It had previously raised concerns about the company’s ability to stay afloat without government help.
In September last year, the Supreme Court had granted 10 years to the telecom companies to clear their AGR dues of around Rs 1.43 lakh crore to the Centre.
Meanwhile, Sunil Mittal-led Bharti Airtel has paid dues worth Rs 18,000 crore and still owes Rs 25,976 crore to the government.

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