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Vodafone Idea, COAI push for urgent relief measures

Source: PTI  -  Edited By: Nandita Malik
February 27, 2020 20:34 IST

In its letter Voda Idea has warned that it is not in a sound financial state, and added that it would be in a position to meet its liabilities only if the government initiates steps including allowing set-offs for GST credit accumulated so far, and permitting staggered mechanism for payment of balance amount of interest, penalty, and interest on penalty.

Voda

Illustration: Dominic Xavier/Rediff.com

Vodafone Idea Ltd (VIL) has told the government that it is unable to pay Supreme Court mandated Rs 53,000 crore dues and sought state support to survive the crisis, a contention that was supported by industry association COAI.

With the crucial meeting of DCC likely to be held on Friday to discuss relief measures for the AGR-hit industry, VIL has made a strong push for setting off Rs 8,000 crore of GST credits and a three-year moratorium on payment of the remaining amount which should be staggered over 15 years at a simple interest rate of 6 per cent.

 

It has also sought drastic cut in licence fee and fixing of a minimum price of calls and data.

VIL, which had last week paid Rs 3,500 crore out of the outstanding dues, in a letter to the Department of Telecommunications (DoT) said it is "not in a sound financial state" to settle the dues and sought "urgent support from the government".

The Cellular Operators' Association of India (COAI), in a separate, almost similar letter, has urged the government for easier terms for payment of dues by telcos including loans at lower rates to settle liability, as also an urgent implementation of floor prices for call and data.

The Digital Communications Commission (DCC), the highest decision-making body of the government on telecom, is likely to meet on Friday to discuss relief measures for telecom companies hit by the Supreme Court ruling.

Among the options likely to be deliberated on Friday is allowing staggered payments for statutory dues for the telecom industry.

The DoT sources said a lot would also depend on companies like VIL making additional payments as the amount received so far from the company is only 7 per cent of the DoT-calculated AGR dues of Rs 53,000 crore.

DCC, whose members include secretaries of Ministries of Finance, Commerce, and Electronics and IT, as well as CEO of NITI Aayog, will ponder on the possible relief measures for the sector that has plunged into an unprecedented crisis.

COAI, meanwhile, claimed that Reliance Jio was onboard over the relief it has sought from the government.

Jio, which previously has been at loggerheads with the association of which it is a member over the need for a relief package for the industry, did not answer e-mail sent for comment.

In its letter VIL has warned that it is "not in a sound financial state", and added that it would be in a position to meet its liabilities only if the government initiates steps including allowing set-offs for GST credit accumulated so far, and permitting staggered mechanism for payment of balance amount of interest, penalty, and interest on penalty.

Citing its losses over the last few years, the company said the financial stress in the telecom sector is widely acknowledged.

The company underlined its current subscriber base of 300 million, and employee base of 10,000 direct staffers while making a strong pitch for "urgent support from government".

VIL said it can settle the balance of its self-assessed principle if the Centre allows set-offs of Rs 8,000 crore worth of GST credit lying with the government.

The company has sought a moratorium of three years on payment of interest and penalty, and subsequent payment timeline of 15 years at an interest of six per cent.

Both the letters bat for grant of loan, equal to AGR amount at six per cent interest rate so that the statutory liability may be discharged immediately.

When contacted, a VIL spokesperson refused to comment on the issue.

Both VIL and COAI, in separate letters, batted for reduction in licence fee to three per cent from the current eight per cent, and also sought reduction in spectrum usage charges (SUC).

Blaming the below-cost pricing of telecom services, compelled by competitive pressures as being the root cause of financial stress, VIL has sought immediate implementation of floor price in tariffs.

It said a floor price needs to be immediately made effective, say from April 1, 2020 to ensure that the sector is fully sustainable and in a position to pay deferred spectrum and AGR dues and still invest to create world-class network and services.

IT has demanded fixing minimum tariffs for mobile data at Rs 35 per GB, around 7-8 times of current prices, and for calls at 6 paise per minute along with monthly charges from April 1 to enable it pay statutory dues and make its business sustainable.

The company said the introduction of floor price will enable revenue of the telecom sector to nearly double from the current level of Rs 1.75 lakh crore.

"Revenue of VIL is likely to touch the revenue levels which existed five years ago i.e 2015-16 and ensure that enough cash is generated to pay for deferred auction spectrum dues and deferred AGR payments of interest, penalty and interest on penalty," Vodafone Idea said.

VIL chairman Kumar Mangalam Birla has in the past made it amply clear that the company will fold if it is forced to make payment of over Rs 53,000 crore dues.

Birla has held multiple rounds of discussions with the finance minister and the telecom minister over the last few days to explore options to keep the company afloat.

In all, as many as 15 entities owe the government Rs 1.47 lakh crore -- Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges.

These dues arose after Supreme Court, in October last year, upheld the government's position on including revenue from non-core businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which is paid as licence and spectrum fee to the exchequer.

The Supreme Court earlier this month rejected a plea by mobile carriers such as Bharti Airtel and VIL for extension in the payment schedule and asked them to deposit an estimated Rs 1.47 lakh crore in past dues for spectrum and licences.

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Source: PTI  -  Edited By: Nandita Malik© Copyright 2020 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
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