The centre has cleared a relief package for the embattled telecom sector, in a move to provide relief to companies weighed down by huge AGR dues. The package would provide relaxation to telecom companies on payment of their long outstanding dues, including a four-year moratorium on spectrum installment which is due in April 2022 and discontinuation of spectrum usage charges. The telecom companies may also get an option to convert interest on their spectrum dues amounting to four-year moratorium, into equity.
The relief package will provide relief to India’s three major wireless carriers, i.e. Reliance Jio, Bhari Airtel and especially Vodafone Idea.
Vodafone Idea, which was created from the merger of British telecom giant Vodafone’s India unit and Birla’s Idea Cellular, owes Rs 50,399.63 crore in statutory dues to the government.
The telecom sector was shaken by Jio’s entry in late 2016 with free voice and cut-price data plans.Jio pushed several rivals out of the market, while others – such as the Indian unit of Britain’s Vodafone and local Idea Cellular – were forced to regroup.
The sector was also hit by a Supreme Court ruling last year, which forced Bharti Airtel and Vodafone Idea to pay their pending dues to the government.
Kumar Mangalam Birla, former chairman of Vodafone Idea, had in fact wrote a letter to the cabinet secretary offering his stake in Vodafone Idea to the government or any company approved by the government for free. On August 4, Mr Birla resigned as the chairman of Vodafone Idea.
Earlier this week, banks led by State Bank of India called on the government to give Vodafone Idea more time to clear its tax dues.