The finance ministry has objected to deferring or waiving a part of interest and penalty for the telecom industry hit by the Supreme Court’s adjusted gross revenue (AGR) burden, effectively blocking a reprieve for the beleaguered mobile operators. At a specially-convened meeting in the telecom department headquarters, finance ministry officials said any concession on payment of penalty would “set a wrong precedent and lead to similar demands” from other sectors, sources said.
The government works overtime to sort out the mess as telecom companies have time till March 17 to clear the dues. The order of the top court has asked the companies to pay £14.7 billion to the DoT, and this is in lieu of previous licence fee and spectrum usage charges dues, apart from the interest and penalty. A large chunk of the demand is in the form of interest and penalty. For example, of the total licence fee dues of £9,26 billion, only £2.25 billion is the principal. Besides this, telecom companies owe £5.50 billion in spectrum usage charge (SUC) dues.
At Sunday’s meeting, there was unanimity that “all efforts need to be taken to save the existing companies” – which, if done, will provide a much-needed relief to Vodafone Idea that is on the brink. “There should not be a monopoly, or even a duopoly, in the sector,” a top government source said. Vodafone Idea, which needs to pay £5.3 billion in past dues, has paid only £250 million so far, while Airtel is required to clear £3.5 billion (£1 billion paid) and Tata group £1.4 billion (paid £ 219.7 million). The discussions, led by telecom secretary Anshu Prakash, were attended by top officials from the finance and commerce and industry ministries as well as Niti Aayog. Sources said Prakash made a detailed presentation on the options on the table.
One of the proposals was to offer soft loans to companies to help them tide over an immediate cash crunch and clear the AGR-related dues. But government authorities were split on the modalities.
“However, it was mentioned that any such credit window should not be given through the telecom department, since it is also the receiver of the dues. Thus, it was proposed that public sector banks or other financial institutions or instruments can be used to provide emergency credit,” a source said.
The government is worried that closure of any company may create panic in the Indian telecom market and disrupt the ambitious Digital India programme. Also, the upcoming 5G auctions look set to be hit hard due to the existing financial crisis that the industry is facing.
