Supreme Court’s AGR ruling will lead to telecom sector’s collapse: FICCI to FM

NEW DELHI: The Supreme Court ruling on adjusted gross income won’t simply result in the collapse of the telecom sector however can even have a cascading impact on a number of different sectors together with energy, metal and railways, in response to business chamber FICCI.

The Federation of Indian Chambers of Commerce and Industry (FICCI) in a letter to Finance Minister Nirmala Sitharaman looking for her pressing intervention to resolve woes within the telecom sector mentioned the debt-ridden business has no urge for food left to spend money on networks and future applied sciences whereas companies internationally are exploring new alternatives round rising applied sciences like 5G, artificial intelligence and web of issues.

“Given the multiplier impact the (telecom) sector has on the economy and various intermediary industries, it is of critical importance that the sector remains healthy, dynamic and vibrant,” FICCI mentioned.

The Supreme Court On October 24, 2019 upheld the federal government’s approach of calculating telecom income, on which licence payment and spectrum utilization fees are computed.

As per the preliminary calculations, entry gamers like Airtel, Vodafone Idea and different operational telecom operators could must pay the federal government a whopping Rs 1.33 lakh crore inside three months.

Telecom Minister Ravi Shankar Prasad in Parliament final week mentioned that there isn’t a proposal earlier than the federal government at current on waiver of penalties and curiosity on excellent licence payment funds based mostly on adjusted gross income (AGR), or on extending the timelines for telcos to pay up their statutory dues.

“This ruling will have a cascading effect and will severely impact many other companies in multiple sectors such as internet service providers, satellite communications providers, cable operators and even companies in power, steel and railways sector,” FICCI mentioned.

According to inside estimate of the Department of Telecom, telecom firms that are operational at current must cough up round Rs 1.33 lakh crore by January 2020 as per the apex courtroom order.

This is past the full debt on the telecom sector estimated to be round Rs 7.87 lakh crore as on August 2017.

“…As you are aware, currently the sector is saddled with a massive debt and has almost no appetite to invest in networks and future technologies. Adding further woes to the sector, the recent ruling on the AGR, dues of the telecom service providers will lead to an unfortunate and disastrous collapse of the already battered sector,” the letter mentioned.

Both Bharti Airtel and Vodafone Idea have expressed uncertainty on persevering with their operations following the apex courtroom judgement and within the absence of aid from the federal government.

Vodafone Idea posted an unprecedented lack of 50,922 crore– highest ever by any company in Indian Inc and Bharti Airtel posted it highest lack of Rs 23,045 crore within the second quarter of present fiscal.

Reliance Communications posted Indian Inc second greatest lack of Rs 30,142 crore following the apex courtroom judgement.

“At a time when the world is witnessing the advent of new possibilities and business opportunities from emerging technologies such as 5G, AI, IoT, etc which will redefine the way businesses and economies will work in the coming decades, it is important that India retains its leadership position in the telecom space,” the letter mentioned.

The business physique referred to as for change in coverage saying that well timed intervention and assist won’t solely save the sector from the brink of collapse however guarantee a wholesome development including to the financial momentum of the nation.

The authorities just lately doled out a Rs 42,000 crore aid to debt-laden telecom firms after it agreed to not take any funds for spectrum they use for the subsequent two years.

The Union Cabinet accredited giving Bharti Airtel, Vodafone Idea Ltd and Reliance Jio an choice to avail of a two-year moratorium on funds they have been presupposed to make in yearly installments for the spectrum purchased in auctions.

While the transfer will give Rs 42,000 crore aid to Bharti Airtel, Vodafone Idea and Reliance Jio, the federal government is unlikely to intervene within the Supreme Court-mandated statutory funds, prime sources mentioned.

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