Financial relief for India’s telecommunications sector

Financial relief for India’s telecommunications sector

A three-month moratorium on bank term loans and working capital finance offered by the Reserve Bank of India in response to the Coronavirus pandemic could prove especially useful to the country’s telecommunications sector.

The moratorium is seen as likely to offer some short-term cash-flow respite and improve the liquidity levels of companies like Vodafone Idea and Bharti Airtel. 

However, some experts have called on the government to consider a three-month moratorium on operators’ revenue-share commitments for the April-June quarter.

Telecommunications companies meet their revenue share obligations by paying a percentage of their adjusted gross revenue (AGR) as licence fees and spectrum usage charges (SUC) to the Department of Telecommunications (DoT). They pay eight percent of their AGR as licence fees and around four percent as SUC.

In addition, the operators have asked the Telecom Regulatory Authority of India (TRAI) to defer mandatory monthly and quarterly filing of reports by at least by six weeks. Telecommunications companies are required to submit multiple datasheets and reports to TRAI as a part of regulatory compliance. These include reporting of their tariff packs as well as inactive or suspended subscribers. Given the strain on human resources of the operators at the moment, that may be difficult.

Meanwhile, the regulator has suspended all open house discussions (OHD). These allow industry stakeholders and officials to come together to discuss issues that require attention and better policymaking.

Also unlikely to happen for a while is the Supreme Court’s consideration of the government’s request to allow telecommunications companies to stagger their AGR payments over 20 years or less. It’s now unclear when the hearing will take place.

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