Cabinet approves relief packages for the telecom sector

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The Indian government has approved measures aimed at easing business in the telecom sector, following the recent bankruptcy of two mobile operators.

Telecom service providers (TSPs) collectively face a debt overhang of ₹4.6-lakh crore. It has been extended from current 10 years to 16 years, so the operators now got 16 installments to make the payment.

Mumbai: Telecom shares rose on Thursday after the Union cabinet cleared a relief package for the industry.

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

The cabinet said in a statement that the measures should increase the operators' cash flow in the near term, as well as support further consolidation and participation in upcoming spectrum auctions. In line with earlier recommendations of TRAI, the current cap of 50% on intra-band spectrum holding has also been removed.

There will be no cap on individual or combined spectrum holding in bands above 1 GHz, as per the government release today.

The cabinet also chose to do away with the cap for individual or combined spectrum holding in bands above 1GHz. The revised spectrum cap limits may be revisited after Final Acts of World Radiocommunication Conference (WRC) 2019, said the statement.

The Telecom Commission, the highest policy-making body of the Department of Telecom, had cleared some of the IMG's key recommendations to chalk out relief measures for the beleaguered sector.

Telecom industry lobby group, the Cellular Operators Association of India (COAI), welcomed the changes.

Similarly, Bharti Airtel, which is acquiring Norwegian firm Telenor's India business, while also merging Tata Teleservices' consumer mobile business, will also stand to gain from the move.

With the twin decisions, the government hopes the cash flow for the telecom service providers will increase in the immediate time-frame providing them some relief. The combined entity will replace Bharti Airtel Ltd as the country's largest operator.

The panel had suggested that the government approach the regulator for its views on the issue of spectrum holding limit.

This is unedited, unformatted feed from the Press Trust of India wire.

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