The Union Cabinet has unveiled a relief package for the telecom sector, which includes a slew of measures comprising nine structural reforms and five process reforms. The Cabinet has also approved four years’ moratorium on telecom dues — these decisions will be applied prospectively. The government has also decided to increase the FDI cap through the automatic route for the telecom sector from 49 per cent to 100 per cent. It is only a deferment of spectrum liabilities in AGR dues for four with additional interest.
An Indian court last year ordered the mobile carrier, a joint venture between the Indian unit of Britain’s Vodafone Group (VOD.L) and Aditya Birla Group’s Idea Cellular, to pay just over $8 billion to the government to settle long-standing dues. Vodafone has a stake of about 44% in the company and Aditya Birla owns nearly 27%. Vodafone Idea’s gross debt as of June 30 was 1.9 trillion rupees, comprising of deferred spectrum payment obligations of 1.06 trillion rupees and an adjusted gross revenue liability of 621.8 billion rupees, its latest stock exchange filing in June showed.
The adjusted gross revenue is the usage and licensing fee that telecom operators are charged by the Indian government. The mobile operator also reported that it owes 234 billion Indian rupees ($3.18 billion) to financial institutions. All telecoms reforms will be applied going forward and not retrospectively, which means Indian carriers still have to settle billions of dollars in outstanding Adjusted Gross Revenue (AGR) payments to the Government. The Supreme Court had previously directed companies to clear AGR dues by 2031.
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