Cabinet to discuss bailout package for telecom today – Times of India

NEW DELHI: The telecom sector, especially Vodafone Idea, is likely to get relief from the government — possibly as early as Wednesday — with anticipation of a package that may include a cut in the levies that the industry pays, apart from a lenient definition of income (adjusted gross revenue, or AGR) which will reduce the total burden.
The Union Cabinet is scheduled to discuss the relief measures to industry players, including Airtel and Reliance Jio. “If approved, the package may end up freeing up thousands of crores of rupees for the telecom players. The government is serious about its intent to keep the industry healthy and having a healthy competition so that advancements can be made towards new technologies such as 5G over the coming period,” sources told TOI.

On the cards is a 2-percentage-point reduction in the licence fee that telecom compnies pay to the government, which is currently pegged at 8%. This will be in line with the recommendations made by regulator Trai.
“The other big relief could be a re-calibration of the definition of AGR, which is used to compute the licence fee (LF) and spectrum usage charge (SUC). The government may allow companies to exclude their non-telecom earnings from AGR calculations, which will effectively help them reduce the LF and SUC payouts to the exchequer,” a source said.
The government may also give the industry an extended holiday on spectrum payments beyond the two-year moratorium that players are already enjoying.
While the financial woes at Vodafone Idea seem to be the immediate trigger behind the telecom department’s urgency to approve a bailout, analysts say that “market leader Reliance Jio and secondbiggest Bharti Airtel would be the big gainers” from any government support.
“While a weak player like Vodafone Idea gets breathing space to put its house in order and work out a revival strategy by roping in investors, the stronger players will get a huge boost by cut in taxes and other relief measures. Their operations get even stronger and financially more stable, and robust,” an analyst, who advises some of the telecom companies, said.
A top source said telecom secretary Anshu Prakash and senior officials from the telecom department had made presentations at the Prime Minister’s Office (PMO), ahead of preparing the proposals for the Cabinet.
“The telecom ministry has been working overtime to prepare a package. Many officers have been working late nights as the government undertakes urgent steps to help the industry come out of the financial mess,” the source said.