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Panel approves extension of time period for spectrum payment to 16 years

By / September 30, 2017 / / 0 Comments

The Telecom Commission (TC) has approved an increase in the timeframe for deferred spectrum payments to 16 years, as well as a change in calculation of interest for delayed payments.

However, telecom companies will not get any relief on spectrum charge or licence fee. The industry says the TC`s measures will give some relief to operators in the long run but the current problem of financial stress remains.

The government had formed an inter-ministerial group (IMG), to address the financial stress in the sector and it had recommended all these measures. The TC in its earlier meeting had sought clarifications on some points. After getting these, Friday`s decisions were taken. The Cabinet will now take a final call. A source said there would be no further relief for telecom operators from the IMG.

According to sources, the TC approved an increase in the tenure for deferred spectrum payment to 16 years from the current 10 years. The TC had asked IMG if it should be 12 or 14 but after discussion, it was decided to make it 16 years.

Also, using the marginal cost of funds-based lending rate (MCLR) for calculating the interest on delayed payment, instead of the prime lending rate (PLR), was approved. “It was decided the rate would be MCLR+4. It will give two-three basis points relief to operators, as the PLR rate had been around 14 and MCLR was around eight; so, MCLR+4 means the new rate will be around 12, ” a source explained.

The spectrum holding cap issue had already been referred back to the Telecom Regulatory Authority of India (Trai). The department oftTelecommunications (DOT) has already sought legal opinion on the Adjusted Gross Revenue (AGR) applicable in the case of receipts from spectrum trading. The TC is likely to take up both issues in its next meeting, by when it expects the replies.

The longer duration of deferred spectrum payment could increase the cash flow of telecom operators by Rs 55,000 crore. Due to the change of PLR to MCLR, cash flow benefits of Rs 20,000 could accrue.

The industry`s debt dues are estimated at Rs 4.5 lakh crore, incurred mainly on account of payment for spectrum, beside other levies. With the entry of Reliance Jio last year, the industry has been locked in a rate war. Incumbent operators have been contending there is pressure on revenue and profitability, blaming the rock-bottom data rates and free offerings of Jio.

Other decisions

The TC also approved some guiding principles and a road map for the New Telecom Policy (NTP) to be announced by March. DoT plans draft approval of the road map by the TC by November 30 and issue of the draft policy for consultation with stakeholders by December. By January, a Cabinet note will be sent.

According to sources, the guiding principle of NTP would be a focus on the Digital India vision and on telecom as an enabler of economic growth. Second, there should be connectivity for all. Also, the protection of consumer interests — these would cover affordability and quality of services, privacy, data protection and cyber security. Also, it should be technology-agnostic and innovation-friendly, promoting and ensuring competition, and in conformity with the ease of doing business.

The NTP should ensure financial stability and sustainable growth of the sector, so that adequate investment comes in. And, promoting design, development and promotion of manufacturing of telecom equipment in India.

The work on NTP will involve a two-tier process. One working group will have all stakeholders, including industry and financial institutions, and an expert advisory group which will have domain experts.

In-building access approved

Currently, licensing provisions don`t mandatorily ensure provisioning for in-building connectivity. The TC has agreed it should form part of the National Building Code, so that every building coming up must have telecom ducts and no building plan should be approved without having a plan for creating this infrastructure. Also, a completion certificate should be granted only after ensuring that this infrastructure has been put in place.

DoT will write to the ministry of urban development to make it part of the National Building Code and building bylaws and to all municipalities.

Trai had in January 2017 proposed all telecom operators be mandated to share in-building infrastructure. The TC has decided that operators should share the infrastructure but the terms should be mutually agreed.. If this agreement isn`t there, Trai should suggest a mechanism for resolving this. TC will be writing to Trai on this.

BSNL tender

The TC also approved a tender of government-owned Bharat Sanchar Nigam for provision of mobile services for uncovered villages in Arunachal Pradesh and two districts of Assam.

The government of Telangana will impement BharatNet along with their project Mission Bhagiratha, which is a smart water grid project aiming to cover 25,000 rural habitations and 67 urban settlements.

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