The recommendations of the inter-ministerial group (IMG) on telecom seem to have run into some legal complications. The Telecom Commission (TC) headed by its chairperson and department of telecommunications secretary Aruna Sundararajan, which met on Friday to discuss the report, decided to send it back to the panel seeking clarifications on certain issues. Sources said that the IMG is expected to provide the clarifications in two weeks after which the TC would meet again to deliberate on it. Though officials did not say what kind of clarifications were sought, sources said that the issue of providing any concessions that amount to changing the conditions provided in the notice inviting applications (NIA) for spectrum auctions requires clarification as it could lead to legal trouble.
As is known, the IMG is understood to have suggested extension in the deferred payment period for spectrum bought in auctions from the current 10-year period to 16 years. However, it has said there won’t be any extension in the two-year moratorium operators get after paying a portion of the amount upfront.
Now the problem is that in the NIA the deferred payment period was fixed as 10 years so if the same is extended, the question arises whether it would not mean changing contract conditions at a later stage, which could be challenged legally by some parties.
Sources said that there is a precedent to it and, therefore, the TC thought to tread cautiously. For instance, in the past the government wanted to move to a uniform spectrum usage charge of 3% of the adjusted gross revenue of operators for spectrum in all the bands but the attorney general at that stage said that since in 2010 the NIA had said that SUC on 2300 MHz spectrum would be 1% of AGR, it cannot be changed later.
The TC wants the IMG to provide its views on the matter. If the deferred payment period is extended, it would provide only cash-flow relief to the operators and not offer a major concession since the net present value of the amount to be paid is fixed.
The telecom industry’s total debt stands at around Rs 4.60 lakh crore. It has bought spectrum since 2010 worth Rs 3.45 lakh crore for which an upfront payment of Rs 1.90 lakh crore has been made and the balance Rs 3.08 lakh crore needs to be paid up to 2028-29.
If the deferred payment period is increased, this amount would be paid over a longer tenure. Though the incumbents had favoured an extension in the payment period, Reliance Jio had opposed it.
The other recommendation of the IMG is that if there’s any delay in payments by operators of licence fee or spectrum usage charges, etc, the interest will be charged on the basis of MCLR instead of PLR. Sources said that the TC has asked for some clarifications on this count also.
As reported earlier, the IMG has not recommended any major change in policies like reduction in licence fee or spectrum usage charge on which the entire industry was united in its presentation before the panel. This is because members of the finance ministry in the panel were opposed to any such measure since it affects government revenues.
In FY17, total receipts for the government from telecom services including spectrum auctions was at Rs 78,715 crore. For the current fiscal, since there’s no auction scheduled, it has been estimated at a lower Rs 44,342 crore. With downward competitive pressure coming on tariffs with the coming of Reliance Jio, even the revenue share licence fee that the operators pay to the government is on a downward trend on a quarter-on-quarter basis.
Among other items on the agenda, the TC on Friday cleared phase-II of the BharatNet project, which will provide high-speed broadband in 1.5 lakh gram panchayats. The project cost of this phase is Rs 18,792 crore.