Cabinet approves two relief measures for stressed telecom sector
The Union Cabinet has approved two key measures in telecom sector to facilitate investments, consolidation in the sector and enhancing ease of doing business. These include restructuring
- Deferred payment liabilities of spectrum auction of telecom service providers (TSPs).
- Revising the limit of the cap for spectrum holding for TSPs.
Restructuring of Deferred Payment Liabilities of TSPs for spectrum
It extends time period for payment of spectrum bought in auction to 16 years from the present 10 years. It will give one-time opportunity for TSPs to opt for higher number of instalment (maximum 16 instalment) apart from currently permitted 10 instalments
The increased instalment is based upon principle that Net Present Value (NPV) of Payment Due is protected as per respective notice inviting application for auction of spectrum from 2012. The total amount received will be higher by Rs. 74,446 crore till 2034-35.
Revision of limits of cap for spectrum holding
Based upon the recommendations of TRAI and Telecom Commission, the Union Cabinet also approved revision of limits of cap for spectrum holding. They are
- Overall spectrum cap is revised from current limit of 25% to 35%.
- Current intra-band cap is removed. Instead, there is cap of 50% on combined spectrum holding in sub-1 GHz bands (700 MHz, 800 MHz and 900 MHz bands).
- There will be no cap for individual or combined spectrum holding in above 1 GHz band.
Telecom Regulatory Authority of India (TRAI) had recommended revision in existing limits of cap for spectrum holding taking into consideration technological advancement, efficient use of spectrum, measures to facilitate consolidation etc. The revised spectrum caps limits may be revisited in future after Final Acts of World Radiocommunication Conference (WRC) 2019.
Restructuring of deferred payment liability will increase cash flow for telecom service providers in immediate timeframe and provide them some relief. Revising spectrum limit cap holding will facilitate consolidation of telecom licensees, thus aid mergers and acquisitions in the sector and may encourage TSPs participation in future spectrum auction.