Govt sets up relief panel for financially stressed telcos
30 October 2019
The government has constituted a panel to examine the problems faced by telecom operators and suggest ways to revive their financial health, amid plunging industry revenues and mounting debt.
The committee of secretaries (CoS) under the cabinet secretary will consider the demands of telcos and suggest ways to alleviate their financial stress so as to create a favourable investment environment, reports citing sources close to the development said.
The CoS will specifically look into the telcos’ demand for deferment of payment related to spectrum auction for the years 2020-21 and 2021-22 in order to ease cash flow, the report said.
It may be noted that Bharti Airtel on Tuesday delayed its September quarter results, saying it was awaiting clarity on an SC order that directed te;ecom operators to pay at least Rs92,000 crore in past dues to the government.
Major telecom companies were already in the red after coming under severe pressure of cheap services by Reliance Jio Infocomm Ltd that entered the market in September 2016.
The Mukesh Ambani-controlled company disrupted the industry, first through free services and later through ultra-cheap data tariffs, triggering a wave of consolidation. Smaller operators either shut shop or sold their assets to bigger telcos.
For an industry sitting on a Rs7,00,000 crore debt pile, the Supreme Court verdict upholding the government definition of Adjusted Gross Revenue (AGR) calculation has come as a severe blow.
While the companies had disputed the government formula for revenue sharing, they have come to a stage of ignoring government demands even at the height of their profitability. The result is a Rs92,000 hit that will hurt Airtel and Idea Voda the most.
The fact that the telecom companies have been underreporting revenues for long is now known to the judiciary as well. In 2017, the Comptroller and Auditor General of India (CAG) had tabled a report in Parliament which observed that six private telecom players understated their revenues by over Rs61,000 crore, causing a loss of Rs7,697.62 crore to the exchequer.
The CAG also questioned the government for not taking adequate action against the companies for understating revenues.