GOVT PLAYS THE “HAPPY” RING TONE!

Tring, tring!!

Vi: Hello, who’s that?

Oh, the Union Cabinet…

Vi: (In a quivering, scared voice) What is this regarding now?

Well, the AGR and the dues owed to us..

Vi: Umm..Ahh…we are just about holding on to a thread of life, hope you are not cutting off that too..

Infact, we have good news for you… we have approved a relief package and it is everything that you asked for!

Vi: Sound of silence and disbelief and then the sound of a thud – Vodafone fainted and fell!!

Yes, that’s the scene we visualized if we were to make a satire on the telecom sector yesterday.

After being pounded to death, killing a very vibrant sector to now leave just three players – Jio, Vi and Airtel, with Vi close to the brink; this approval of yesterday brings back some hope; maybe the sector will not be a playground of Ambani or we even have become optimistic enough to think that maybe the Govt does have a mind of its own, sometimes. Better late than never…

The Govt approved:

• 4-year moratorium on payment of AGR dues by telcos – they will have to pay interest @ MCLR+2%, effective 1^st Oct, if they take moratorium
• Option of converting a part of their dues into government's equity now and some part after four years.
• reduction in the spectrum usage charge (SUC)
• Spectrum can now be surrendered as well as shared.
• All non-telecom revenue to be taken out of AGR:
• 100% FDI in telecom via automatic route is approved v/s 49% now
• Rationalised interest rates for telcos – approved annual compounding
• Tenure of future spectrum auctions increased from 20 years to 30 years
• Telcos can be surrendered after a 10-yr lock-in period if there is a change in technology
• 4G/5G to be deployed via indigenous tech
• Spectrum auction calendar will be created
• Tower set-up process is now simplified on the basis of self-approval.

It would not be an exaggeration to say that Kumara Mangalam Birla’s letter in June, offering to hand over his stake in VIL to the Govt or anyone that the Govt considers worthy, could have triggered off the much-needed introspection. It did force the Govt to sit up and take notice and this relief package was that acknowledgment.

Apart from improving liquidity, rationalisation of AGR will result in significant savings for the telcos as they will no longer be required to pay AGR on non-telecom revenues. The moratorium means that the liability is postponed; it is not eliminated.

Undoubtedly, this telecom package’s main aim was to probably prevent the telecom sector from becoming a duopoly. And that’s a big relief in itself.

Clearly, Bharti Airtel, Vodafone Idea and Indus Towers will remain the stars in the today’s market.