No policy tweaks required now for telecom sector: Ministerial group

Panel feels financial stress easing; may meet next week again

New Delhi, August 11:  

Policy intervention may not be required as ‘green shoots’ in the telecom sector have started to appear in the first quarter, according to a source.

The financials are improving, so policy intervention may not be required, said a senior official after the meeting on Friday. However, final decision has not been taken yet, said the official, after the Inter-Ministerial Group meeting looking into the financial stress in the telecom sector.

The IMG’s next meeting could be held on August 16 and there is a possibility that the report may be signed on August 17.

The official, who was part of the meeting, said, “We have demands of the industry on the table but what is required or not required is the question.”

As of now, the proposals that are being considered by the IMG include giving telecom companies more time to pay for the spectrum they bought, and if approved such relaxations would improve the cash flow of telecom companies.

Right now, a portion of spectrum auction amount is taken as upfront payment by Department of Telecom (DoT) and the balance after a two-year moratorium is paid out every year in 10 instalments.

Other proposals

Meanwhile, IMG is also considering certain measures, including increasing period of deferred spectrum payments to 16 years, a proposal that could bring some relief to the industry.

Once the recommendations are prepared, it will be placed before the Telecom Commission and ultimately to the Cabinet, for approval.

Other proposals being discussed include convergence between DoT guidelines and RBI guidelines on the issue of allowing spectrum as collateral, the official said. Another proposal being considered was shifting from PLR to MCLR for interest and penalty payments.

(This article was published on August 11, 2017)

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