IMG heeds most demands of telcos, suggests auction next fiscal

An inter-ministerial group (IMG) on the telecom sector's financial woes has accommodated most of the industry's demands in its recommendations to the government, including deferring of spectrum auction to the next fiscal, more time for payment of radio waves and a cut in levies.

According to an official source, the IMG submitted its report on August 31, which will be considered by the inter- ministerial panel -- the Telecom Commission -- scheduled to meet on September 8 for further decision.

"Considering financial stress on the telecom sector, the IMG has recommended that the spectrum auction should be held in the next financial year and not in the current fiscal," the source said.

Regulator Telecom Regulatory Authority of India (TRAI) has started the consultation process for the next round of spectrum auction that includes radiowaves for 5G services and frequencies such as the prized 700 MHz that had no takers in the previous auction.

About 7,500 Mhz of spectrum is under consideration for the auction, which will be about three times the quantum of radio frequencies for mobile services placed for auction in 2016.

Total spectrum worth Rs 5.63 lakh crore was put up for sale, but 61 per cent of it remained unsold.

The telecom industry has been reeling under poor financial health, falling revenue and profitability and is staring at Rs 4.5 lakh crore of debt.

The IMG, in its policy prescription to the government, has recommended allowing telecom operators to make payment for spectrum purchased in auction in 16 annual instalments instead of 10 under the current norms.

Besides, it has favoured a cut in interest rates on penalties by way of switch from PLR- to MCLR-based rate, which could provide relief of about two percentage points in the current situation.

"The IMG has recommended spectrum auctions for the next fiscal and making available 20 Mhz of radiowaves in 2300 band before the auction," said the source.

The IMG too has recommended reduction in licence fee and spectrum usage charges under the new telecom policy, he said.

However, the panel has not heeded the demand of Vodafone of reducing interest rate of 10 per cent charged on spectrum payments to around 6.25-6.5 per cent.

Responding to PTI queries, industry body Cellular Operators Association of India (COAI) said IMG's recommendations "ease debt part of the industry, but no immediate relief".

"Thankful to IMG for considering our request. It addresses only debt issues of the sector, but the fundamental issues have not been addressed. The industry was expecting immediate relief on licence fees and spectrum usage charges as per TRAI recommendation. Unless these issues are not resolved, the industry will continue to struggle financially," COAI Director General Rajan S Mathews said.

The IMG -- comprising senior officials from ministries of finance and communications -- was constituted in mid-May to "examine systemic issues affecting viability and repayment capacity in the telecom sector and furnish recommendations for resolution of stressed assets".