Outcome of the Telecom Committee Meeting

Outcome of the Telecom Committee Meeting

by 5paisa Research Team Last Updated: Dec 11, 2022 - 05:48 am 53.3k Views
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There were major expectations that the Cabinet Meeting on Telecom on 08 September would be a game changer. However, the meeting started at 11 am on Wednesday but did not discuss any of the contentious issues like relief package for Vodafone, change in methodology of AGR computation, deferral of spectrum fees payment etc. The I&B Minister, Anurag Thakur, merely said that the issue was not discussed.

 

In a way, it is disappointing for telecom stocks, especially Vodafone Idea. It is struggling with its mounting losses, falling customer base and a huge outstanding liability of Rs.180,000 crore. Most of this is owed to the government in the form of Annual Gross Revenue (AGR) dues and spectrum fees payable.

 

The last relief for telecom players was when outstanding AGR dues were defrayed over 10 years in equal instalments. Here were some key expectations that telecom companies had from the Cabinet Committee on Telecom.

 

• There were expectations of rationalization of telecom license fees so as to reduce the prospective burden on telcos.

 

• It was hoped that the AGR definition would be tweaked to exclude non-telecom revenues sources to give relief to telecom companies.

 

• Telecom players were expecting a moratorium of another 2 years on AGR pay-outs, but markets are unsure how attractive it would be with interest implications.

 

• There were hopes that government would intervene to bail-out Vodafone, which is stuck with debt of Rs.180,000 crore and huge accumulated losses that have wiped out their net worth.

 

• The street was expecting that part of the debts of Vodafone Idea would be converted into equity so that the government becomes a partner in the rescue.

Anurag Thakur has been non-committal on whether this would be taken up for discussion next week. Any worsening of the situation at Vodafone Idea would not only lead to loss of jobs, but also a huge dent on banks that guaranteed most of the statutory payables.

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