Industry Experts, Telecom News, ET Telecom
The moratorium on AGR fees will provide an annual cash flow breather of around Rs. 14,000 crore while the moratorium on spectrum fees will give another Rs. 32,000 crore of annual cash flow relief for the industry in as a whole, according to a CIFAR assessment.
âA 4-year moratorium gives the industry enough time to make fundamental improvements by increasing tariffs, which is essential from an industry perspective. Other measures such as forward-looking rationalization of the definition of AGR are accretive to EBITDA and a reduction in SUC on spectrum sharing facilitates sharing and cash flow to some extent, âsaid Sabyasachi Majumdar , Senior Vice President and Group Head – Corporate Ratings, ICRA Limited.
Experts welcome the government’s decision on telecommunications sector reforms.
âWe welcome the government’s bold and forward-looking decision on essential reforms for the telecommunications sector. The decisions are an indication of the government’s intention for much-needed structural reforms in the telecommunications sector and in the scenario of Digital India’s success. These measures would go a long way in relieving the financial stress facing the industry, boosting investment, encouraging healthy competition and providing choice for customers, âsaid SP Kochhar, Managing Director of the Cellular Operators Association of India (COAI ).
Telecommunications regulator TRAI said: “These reforms will boost the sector and catalyze new investments in next generation technologies and help India further strengthen its position as a major player in the global digital economy” .
Sonam Chandwani, managing partner at KS Legal & Associates, said the announcement would give struggling telecom operators like Vodafone Idea much needed leeway as they pay millions of rupees crore in prior unfunded legal dues. âThe responsibility is deferred rather than completely written off. The banks association breathes a sigh of relief, as they owe large sums to Vodafone. While it is not clear how Vodafone will repay the obligations, the extra time helps manage stress. “
The Cabinet on Wednesday announced a telecommunications aid plan under nine major reforms and five process reforms. The package includes a moratorium with interest rates for four years, a modification of the definition of the disputed adjusted gross income (AGR), 100% of FDI automatically, the sharing of the spectrum, the authorization of right-of-way to One-stop-shop for tower installation and digital KYC, among others.
Sameer Chugh, Partner, Cyril Amarchand Mangaldas, said: âThe removal of non-telecom revenues from the AGR definition and the removal of penalties is a much needed change that has been made. This additional burden has hurt the telecom industry in the past and will now pave the way for telecom players to make larger capital investments. “
Echoing similar views, Peeyush Vaish, telecom partner and industry leader, Deloitte India said: âStreamlining the definition of AGR by excluding non-telecom revenues and 100% FDI gives a A clear signal to foreign investors that India is committed to bringing about reforms that stimulate the growth of this sector and create a healthy competitive environment.
âThe measures taken will clearly remove some of the uncertainties in the sector. It provides much needed clarification on various aspects and is likely to lead to less litigation and disputes. Overall this should lead to a more stabilized regime and help attract more investment now that 100% FDI through the automatic channel is approved, âsaid Prashant Singhal, Head of Emerging Market Technologies, media and entertainment and telecommunications (TMT), EY.
Singhal noted that the 4-year moratorium on spectrum payments and AGR fees will help cope with financial strains in the sector while the option to convert the amount owed into equity will allow telecoms operators to invest in new technologies and usher in innovation. âThe government will make a real contribution to the growth of the sector.
Although he warned that “the industry has yet to double the ARPU through increased tariffs and new revenue streams for the sector to be attractive. In addition, a streamlining of license fees and GST is required. “
âA back-up plan for telecommunications operators is essential not only to bring stability to the telecommunications sector, but also to provide assurance to existing and potential investors. bring a lot of convenience to telecoms. It would also be interesting to see if the royalty is reduced to 6% compared to the existing 8%. The deferred payment proposal is expected to tremendously help telecoms, which are bleeding at this point and can provide a lease of life, âsaid Rahul Goel, Partner, AnantLaw
âThe reforms will boost jobs, growth, competition and consumer interests in the telecommunications sector. This initiative will not only drive the proliferation and penetration of broadband and telecommunications connectivity, but will also spur the creation of a robust digital infrastructure in the country, âTRDua, said the CEO of the Digital Infrastructure Providers Association ( DIPA, formerly TAIPA).