The government is reported to be considering various ways to offer relief to the stressed telecom sector, in particular to Vodafone Idea<\/a> (Vi), which stares at an existential crisis, given its gargantuan dues, primarily to the government, and unwillingness on the part of its biggest shareholders to invest any further in the operation.
The desire to offer relief to the sector is welcome, but staggering the dues arising from delayed payment of adjusted gross revenue (AGR) shares over 20 years, instead of 10, is likely to prove inadequate. The government has to think more creatively.
Vi and Bharti Airtel<\/a> have filed petitions in the Supreme Court seeking to correct what they deem to be mistakes made by the department of telecom<\/a> (DoT) in the computation of their dues. If the government sees merit in the companies’ plaint, it should support it, even if it means loss of face for DoT.
Licence fees and spectrum usage charges (SUC) are pegged at the rates fixed when spectrum used to be allocated without any upfront payment, bundled with the licence. With spectrum being auctioned from 2010 onwards, fetching the government oodles of money as capitalised lease payments, there is little justification for still extracting high shares of revenue as licence fees and SUC. The government should examine the legality of retrospective reduction in levies under these heads from 2010 onwards.
A more creative solution would be to arrange a ‘sale and lease back’ scheme for the telcos, under which they could sell their spectrum to a cash-rich investor who would, in turn, lease the spectrum back to the telcos for an annual fee. This would eliminate one large annual outgo for the telcos and give them money in hand. They need lots of capital to invest in 5G infrastructure.
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