DoT has said the telecom sector is passing through a financial stress due to various circumstances and telecom services providers are making losses.
The government is considering withdrawing legal cases against telecom companies, involving disputes of about Rs 40,000 crore, according to a source. In line with this, the Department of Telecom has already filed an affidavit before the Supreme Court in a case against Anil Ambani-promoted Reliance Communications to take an informed decision whether to proceed with the present appeal or not, the source said.
DoT has said the telecom sector is passing through a financial stress due to various circumstances and telecom services providers are making losses. It has sighted representation from the Indian Banks’ Association that adverse developments in the telecom sector may lead to failures, vanishing competition, duopoly, unsustainable operations and severe loss for the banking system which has a huge exposure to this sector.
“…the central government is desirous of reviewing and/or re-considering its decision to proceed with the present proceedings of appeal. It is submitted that considering the nature of issue involved, this decision will have to be taken after the scrutiny at various levels which may consumer some reasonable time,” the affidavit dated October 4 said.
According to the government, the amount involved in the cases imposes financial liability to the tune of Rs 40,000 crore approximately on various telecom operators. DoT has asked the Supreme Court for three weeks’ time to enable “the central government to take an informed decision whether to proceed with the present appeal or not” and requested that the case be adjourned for a period of four weeks.
The government on September 15 had announced relief for telecom operators by giving them more time to pay dues and interest on penalties in the form of equities. DoT said the decision was taken to promote public interest, protect government revenue and more particularly encourage competition amongst telecom operators by preventing a situation where viability of some of the service providers becomes unsustainable resulting in monopolistic situations and other adverse impact on the economy.
Cyril Amarchand Mangaldas partner Sameer Chugh said DoT seeking time from the Supreme Court to review and reconsider its decision to proceed with the appeal against the order of the TDSAT in case of RCom seems yet another step to rectify the past anomalies.
“Clearly, the signs of the revival and the future growth of the telecom sector will be a boost to the overall economy also. This will give telcos like Airtel and Vodafone further relief on the amounts owed to DoT from the past and allow for investment into technologies like 5G. The telecom sector, which has been an extremely litigious sector, will see decline in litigation paving the way for more focus on business,” Chugh said.