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Cabinet approves key measures in telecom sector

08 March 2018

Telecom companies and experts welcomed the relief measures, but said more needs to be done, including lowering levies such as licence fees and spectrum usage charges (SUC) for improving the long-term health of the sector.Government officials however believe the worst is over for the sector, with revenue stabilising.

The decision aims at restructuring of deferred payment liabilities of telecom service providers for spectrum by giving one-time opportunity to opt for a higher number of instalment (maximum 16 installment) apart from now permitted 10 installments.

"With the restructuring of deferred payment liability, the cash flow for telecom service providers will increase in the immediate timeframe, providing them some relief".

Telecom regulator TRAI had recommended a revision in the existing limits for spectrum holding, taking into consideration the technological advancement, efficiency in the use of spectrum and measures to facilitate consolidation.

The government expects to receive more than Rs 74,446 crore from this move by 2034-35.

The Cabinet also increased the overall airwaves holding limit to 35 percent from 25 percent.

There will be no cap for individual or combined spectrum holding in above 1 GHz band.

These decisions were taken on the basis of recommendations from the Inter-Ministerial Group (IMG) on the telecom sector. A cap of 50 per cent has been imposed on combined holding of sub-1GHz bands. Predatory pricing from new entrant Reliance Jio had made matters worse for other players. The revised spectrum cap limits may be revisited after Final Acts of World Radiocommunication Conference (WRC) 2019, said the statement. The sector is in under financial stress due to increasing pressure after the entry Mukesh Ambani-led Reliance Jio with free services and cheap data offers. He, however, added that the extension in spectrum payment tenure will have only a minimal benefit through cash flow relief but total payments will increase.

He added that the next procedural changes that the government should consider to further boost the telecom sector are easing the process of obtaining approval from the DoT (providing a fixed timeline for grant of DoT approval upon receipt of the NCLT order), better functioning of WPC and SACFA and providing flexibility in complying with MRO and EMF obligations/ procedures by amending the Telecom Merger and Acquisition Guidelines. The government has considered the importance of telecom and the sustainability of the Industry. He said though that the relaxation of spectrum caps was in line with the ongoing consolidation. The current intra-band cap has been removed.

Cabinet approves key measures in telecom sector