Govt approves relief package to telecom sector, relaxes spectrum holding limit

The Government on Wednesday cleared a relief package for the debt-ridden telecom sector, giving more time to operators to pay for the spectrum bought in auctions.

It has also relaxed the spectrum holding limit for the telecom operators, according to an official spokesperson.

The package was cleared by the Cabinet on Wednesday based on the recommendations of the Inter Ministerial Group (IMG) on the telecom sector.

The IMG was tasked last year to suggest policy reforms and strategic interventions for the troubled sector bruised by falling tariffs, eroding profitability, and mounting debt in the face of stiff competition from new entrant Reliance Jio.

The official said the Cabinet has approved the two key measures to facilitate investments and consolidation in the sector, facing Rs 4.6 lakh crore debt.

These include restructuring of deferred payment liabilities of telecom service providers for spectrum and revision of limit of spectrum holding caps.

These measures are expected to increase the cash flow for telecom operators immediately, providing them some relief, the official said.

Moreover, revising the limit for spectrum holding will facilitate consolidation of telecom players and may encourage their participation in future auctions.

The IMG, in its recommendations submitted last year, had mooted the extension of time period for the payment of spectrum bought in auctions by operators to 16 years from the current 10 years.

Currently, a portion of spectrum auction amount is taken as upfront payment by Department of Telecom(DoT) and the balance, after a two-year moratorium, is paid out every year — 10 instalments in all.