COAI Tells Government to Give 2-Year Moratorium, Lower Interest Rate, Longer Repayment Time

The ruling has resulted in a Rs. 92,000 crores liability for India's telecom sector.

By Indo-Asian News Service | Updated: 18 November 2019 18:36 IST

COAI Tells Government to Give 2-Year Moratorium, Lower Interest Rate, Longer Repayment Time

Highlights

Industry will need a 20 percent increase in ARPU: COAI
There will be immediate need to restructure the debt to Government
Government needs to eliminate or redefine AGR prospectively

The mobile industry has urged Government to help the telcos restructure their debts with a two-year moratorium, lower interest and longer repayment time to help them come out of the financial crisis which has been aggravated by the AGR order of the Supreme Court.

"It will need a 20 percent increase in ARPU to get the companies on a better financial footing. To achieve this, there will be an immediate need to restructure the debt to Government with a 2 year moratorium, lower interest and a longer repayment time. Also Government needs to eliminate or redefine AGR prospectively and reduction in License Fees and Spectrum Usage Charges to 3 percent and 1 percent respectively. GST rate needs to be brought down to 5 percent and GST should be removed from all government payments for debt repayment, interest, LF and SUC," Rajan Mathews, DG of the mobile industry association COAI told IANS.

The July-September quarter (Q2) has dealt a body blow financially to the Indian telecom sector AGR order after the Supreme Court's ruling, already reeling under a bruising tariff war and heavy spectrum dues payment schedules.

The ruling has resulted in a Rs. 92,000 crores liability for India's telecom sector, Airtel, and Vodafone Idea being the worst hit and many of the others have shut operations since then.

Bharti Airtel and Vodafone Idea, India's second- and third-biggest telecom service providers, respectively, came out with unprecedented losses largely a result of the two setting aside cash to pay disputed dues to the government for AGR payment to government. Vodafone Idea's losses ballooned to Rs. 50,922 crores in the three months, from Rs. 4,874 crores in the year-ago period. Bharti Airtel's figure stood at Rs. 23,044 crores the biggest in its 24-year history. The company had earned profits of Rs. 118 crores in the year-ago period.

Botyh telcos have already said unless government gives them relief package, they would find it extremely difficult to remain as going concern.

A Centre appointed Secretaies Panel is looking into the possible bail out packages in terms of lower rate of interest and moratoriums. It is yet to take a final call on this. Last week Finance Minister Nirmala Sitharaman said government does not want any telecom company to shut down.

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