The Union Cabinet on Wednesday cleared a relief package for the debt-laden telecom sector, approving a ministerial panel’s recommendation to raise the ceiling for spectrum holding to 35 per cent.
Currently, the cap on spectrum stands at 25 per cent. BusinessLine had on Tuesday reported that the Cabinet could consider raising the spectrum ceiling to 35 per cent.
Telecom service providers (TSPs) collectively face a debt overhang of ₹4.6-lakh crore.
The Cabinet has also decided to restructure the deferred payment liabilities of TSPs for spectrum, a government statement said. TSPs can thus opt to pay for spectrum bought in auctions in 16 annual instalments instead of the current 10.
These measures, which implement the recommendations of an inter-ministerial group (IMG), will help to consolidate the sector, facilitate investments and enhance ease of doing business, the statement added.
“The increased instalment is based upon the principle that the net present value (NPV) of the payment due is protected as per respective notice inviting application for auction of spectrum from 2012. The total amount received will be higher by ₹74,446.01 crore till 2034-35,” the statement said.
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.
“With the restructuring of the deferred payment liability, the cash flow for the telecom service providers will increase in the immediate time-frame, providing them some relief. Revising the limit for the spectrum cap holding will facilitate consolidation of telecom licensees and may encourage the participation in the future auction,” the statement added.
The Cabinet has also removed the current intra-band cap. Instead, there is a limit of 50 per cent on the combined spectrum holding in the sub-1 GHz bands (700 MHz, 800 MHz and 900 MHz bands). There will be no cap for individual or combined spectrum holding in the above-1 GHz band, the government statement said.
The revised spectrum caps limits may be revisited after the Final Acts of World Radiocommunication Conference (WRC) 2019, to be held in Sharm El Sheikh, Egypt.
The Telecom Commission, the highest policy-making body of the Department of Telecom, had cleared some of the IMG’s key recommendations to chalk out relief measures for the beleaguered sector.
Telecom players have seen their margins narrow due to stiff competition.