Relief Package for Telecom Sector

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Oct 29, 2004
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telecom spectrum: Cabinet approves relief package for debt-ridden telecom sector - The Economic Times

The Union Cabinet has relaxed spectrum holding caps, giving a boost to M&As and spectrum sale, as carriers try to sell assets, including airwaves, to repay debt.

The Cabinet on Wednesday also extended the payments tenure for auctioned airwaves from 12 years, including a two-year moratorium, to 16 years, as a one-time measure, giving much needed relief to carriers reeling under debt burden of more than Rs 7.7 lakh crore.

“With the restructuring of the deferred payment liability, the cash flow for the telecom service providers will increased in the immediate time frame providing them some relief,” the government said after approving two key measures to facilitate investments, consolidation and ease of doing business in the telecom sector.

“The increased instalment is based upon the principle that the Net Present Value (NPV) of the payment due is protected as per respective notice inviting application for auction of spectrum from 2012. The total amount received will be higher by Rs 74,446.01 crore till 2034-35,” the government added.

The Cabinet also increased the overall airwaves holding limit to 35% from 25%. Current government rules bar any merged entity from holding more than 25% of the spectrum allocated in a service area or circle, and over 50% in a particular band.