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Telecom relief package possible, but with riders

Our Bureau New Delhi | Updated on September 15, 2021

Industry veteran suggests the best policy to revive the telecom sector is to give free spectrum to a newcomer

The telecom relief package may come in the near term, but the fate of their future relies only on them, as the government does not have much to offer on the table.

Sources in the Department of Telecommunications (DoT) say that while there is not much they can offer apart from suggestions, it really depends on the Finance Ministry to think of a package along with the Cabinet’s approval.

“There is nothing much on our table to offer as a package…it will all depend on the Finance Ministry,” a senior official said.

According to the official, the DoT has already sent recommendations for a bail out of the telecom sector including a two-years’ extension to the current moratorium that was originally extended in November 2019 for the fiscal years 2020-21 and 2021-22.

This bailout will benefit both the loss-making Vodafone-Idea, and also two other big players, Bharti Airtel and Reliance Jio, sources said.

Also see: Banks stare at higher provisioning as Voda-Idea singes books

Another source suggested that Vodafone-Idea can engage in trading and sharing of its access spectrum to earn some revenues, but warned that existing players already have access capacity of spectrum holdings and so only a new investor may join, which is rather doubtful.

Vodafone Idea has a total of 1,849.6 MHz of spectrum across difference frequency bands of which 1,714.8 MHz is liberalised and can be used towards the deployment of any technology (2G, 3G, 4G or 5G). A further 1,316.8 MHz of spectrum acquired through auctions between the years 2014 and 2016 is valid only until 2034 to 2036.

According to an industry veteran, the best policy to revive the telecom sector is to give free spectrum to a newcomer and apply license fee on average gross revenue as soon as the company captures a certain market share.

However, only the government can decide whether it is feasible or not as a major chunk of the government’s revenue comes from spectrum license fee.

Meanwhile, Sunil Bharti Mittal, Chairman, Bharti Airtel, also hopes that the government and regulators will step in to ensure that the sector remains a viable place for continued investments.

“The industry requires long overdue support to maintain its current 3+1 industry structure and allow players to earn a respectable return on their investments. We have the opportunity to transform India into a global leader in the digital economy. We must continue to evolve our policies to realise these opportunities while encouraging investments, entrepreneurship and innovation through collaboration,” Mittal said in Airtel's annual report for 2020-21.

Published on August 10, 2021

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