COAI seeks telcos' bailout. COAI knocks government doors for telcos bailout

Amid an existential struggle of mobile operator Vodafone-Idea in a three-private player market, Cellular Operator Association of India (COAI) has asked the government for some effective measures to improve the financial health of the telecom sector.

Some of the measures sought include reduction in taxes and levies, increased tenure of existing and future spectrum holdings and providing a 7-10 year moratorium for both present and future payments, reasonable reserve prices and easier payment terms, reduction in interest rate for deferred payment liability and review of adjusted gross revenue (AGR) definition.

In a letter to the Telecom Secretary, Anshu Prakash, Director General, COAI, SP Kochhar in a list of suggestions, has also urged for an early completion of TRAI Consultation on Tariff Issues, waiver of financial and performance bank guarantees (BGs) and reduction in audits and penalties.

He has marked the letter dated August 17 also to the Finance Minister, Telecom Minister and Principal Secretary to the Prime Minister. BusinessLine has seen the letter.

Pricing & payment terms

The association suggested “reasonable reserve prices, easier payment terms in the form of doubling the tenure of all auctioned spectrum holdings both existing and future from 20 years to 40 years, without any additional amounts.”

COAI has also suggested for reduction of Licence Fee (LF) from three per cent to one per cent of AGR for all operators to cover the administrative and regulatory costs in line with the international norms.

“Reduce the interest rate on deferred spectrum payment liabilities to four per cent for all current and future payments including AGR payments... Implement a progressive AGR definition to include only telecom revenue and redefine deductions,” Kochhar said.

Other suggestions include lowering cumulative regulatory taxes and levies burden by reducing License Fee, Universal Service Obligation (USO) levy, and Spectrum Usage Charges (SUC) to cover the administrative and regulatory cost.

VIL licence fee dues

For instance, Vodafone Idea which is on the verge of collapsing has the total gross debt (excluding lease liabilities and including interest accrued but not due) as of June 30, at ₹1,91,590 crore. It includes deferred spectrum payment obligations of ₹1,06,010 crore and AGR liability of ₹62,180 crore that are due to the government.

Meanwhile, on reports of Vodafone Idea being short of ₹150 crore on its payment of licence fee for the June quarter, the company has clarified that it has paid its ‘licence fee dues for first quarter 2021-22’.