AGR dues: Telcos seek tariff floor price, FM Sitharaman says relief measures at appropriate time

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Published: February 28, 2020 1:30:31 AM

Tariff is an area where Trai has complete authority but since the AGR crisis has surfaced, DoT officials have had meetings with the regulator for discussions on the subject.

The notable aspect is that the operators – Bharti Airtel, Reliance Jio and Vodafone Idea – are united on the issue of floor price and certain other relief measures in the light of the AGR burden. The notable aspect is that the operators – Bharti Airtel, Reliance Jio and Vodafone Idea – are united on the issue of floor price and certain other relief measures in the light of the AGR burden.

Telecom operators, burdened with the adjusted gross revenue (AGR) dues, have now urged the government to immediately put in place a floor price for tariffs which will ensure the sector is sustainable and in a position to bear the deferred spectrum and AGR dues.

Meanwhile, the digital communications commission (DCC), the highest inter-ministerial body in the DoT on policy issues, is meeting on Friday to deliberate on the relief measures which can be extended to the operators. In Guwahati, finance minister Nirmala Sitharaman said that the government would announce relief measures with respect to AGR at an appropriate time.

In a letter to department of telecommunications, secretary, Anshu Prakash, the Cellular Operators Association of India (COAI) has said that the floor price needs to be made effective from April 1 and dispelled any fears of a tariff hike which may inconvenience consumers. “We believe, despite introduction of the floor price, average realisation per user (Arpu) will remain extremely competitive,” COAI has said.

The notable aspect is that the operators – Bharti Airtel, Reliance Jio and Vodafone Idea – are united on the issue of floor price and certain other relief measures in the light of the AGR burden. In the past, on the issue of relief relating to AGR, Jio had disagreed with the other two operators.

With industry consensus, it would not be difficult for the Telecom Regulatory Authority of India (Trai) to implement floor price for tariffs. The Trai has already issued a consultation paper on the subject and the last date for sending comments is February 28.

Tariff is an area where Trai has complete authority but since the AGR crisis has surfaced, DoT officials have had meetings with the regulator for discussions on the subject.

Making a case for a floor price, the COAI has said that though the telecom industry is undergoing a financial crisis, Arpus in the country are the lowest in the world (see chart). “The situation is similar when we look at price/GB as a comparison with other countries,” it has said.

Apart from setting the floor price, the industry has also demanded a host of other sops to be able to tide over the AGR crisis and make payments. The demands are similar to what Vodafone, through its letter, sought a day back.

For instance, the industry has urged that its GST credits lying with the government should be set-off against the dues of the respective operators. For the balance amount it has sought a staggered payment with a moratorium of three years, followed by a payment tenure of 15 years at a simple interest of 6%. It has also said that the amount thus payable maybe frozen to avoid recurring claim of interest, penalty, and interest on penalty. “In the alternative, the government may consider granting loan equal to the AGR amount at 6% interest so that AGR liability maybe discharged immediately,” COAI has written.

The demands for reduction in licence fee to 3% from the current 8% and spectrum usage charges to 1% from the current 3%, have also been reiterated.

COAI has also said that banks are currently unwilling to take risk with regard to telecom sector and are constantly asking telcos to reduce their exposure by refusing to issue new bank guarantees or even renew the existing ones.

“There is a need to give a clear message to banks that government is there to support the sector,” COAI has said. It has also written that the requirement of financial bank guarantees for securing licence fee payments should be done away with. However, if DoT still feels that financial bank guarantees are needed, then it should be reduced to one quarter of licence fee.

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