The Indian Cabinet approved nine Structural reforms and five Process reforms for the telecom sector on Wednesday.
It aims to relieve companies that have to pay thousands of crores in unprovisioned past statutory dues, such as Vodafone Idea, Reliance Jio, and Bharti Airtel.
It is a measure of relief for the cash-strapped sector as the Indian Cabinet approved a four-year moratorium period on dues and also redefined adjusted gross revenue (AGR).
Telecom Minister Ashwini Vaishnav said non-telecom revenue would be taken out of adjusted gross revenue (AGR) while addressing the media after the Cabinet meeting. It is an audacious decision taken by the PM today on AGR to rationalize the definition of AGR.
This relief package came as a boon for India’s three major wireless carriers during a time when Vodafone was facing an existential crisis.
The relief measure for the telecom sector includes:-
- Four-year moratorium on payment of statutory dues (for AGR and spectrum charges)
- AGR’s definition has been justified by excluding the non-telecom revenue of telecom companies.
- Annual Compounding will be done by the Centre instead of monthly compounding.
- Approval of 100% foreign direct investment in the telecom sector via automatic route.
- Rationalization of the system of heavy interest, penalty, and interest on payment of license fees, spectrum charges, and other charges.
- Spectrum auction timing increased from 20 years to 30 years.
- Buyers are given the option to surrender by paying surrender charges after completing a 10-year lock-in period.
- No spectrum usage charges and also allowed completely.
- Digital storage data replaced Paper Customer Acquisition Forms (CAF)
The relief package also creates an enabling environment for investment in 5G and also an expectation of a boost in 4G Network proliferation.
Vodafone Idea still owes to pay a statutory debt of roughly 50 crores while it had already paid Rs 7,854 crore to the government.
Last September, SC granted ten years to the companies for clearing their AGR dues around Rs 1.43 lakh crore to the Centre.
Sunil Mittal’s Bharti Airtel is estimated to pay dues Rs.18000 crore and owes Rs 25,976 to the center.
Additionally, a production-linked incentive scheme for the automobile sector was announced.
What is Telecom Sector?
This sector is a combination of companies that make global communication through phone, internet, airwaves, cables, or wires.
“Information technology can be a beacon of hope, allowing billions of people around the world to connect. During COVID-19 pandemic, these connections….are more important than ever”.
The major segment of the telecom sector includes sub-sectors:-
- Wireless communication
- Equipment for communication
- Product and processing system
- Domestic telecommunication services
- Foreign telecommunication services
- Long-distance carriers
Wireless communication is a fast-growing sector of telecom, and Computer communicating systems have shifted to phone devices.
Top telecommunication players of 2021 Worldwide:-
- AT&T (T)
- Verizon (VZ)
- Nippon Telegraph & Telephone Corp (NTTYY) – Japan
- Deutsche Telekom AG (DTEGY) – Germany
- T-Mobile US Inc. (TMUS)- U.S
