Survey red flags telcos' rising share in bad loans

Reliance Jio Jio

Panel on telecom sector health to meet again next week

A section of the panel looking into the telecom sector's health feels large scale policy intervention may not be needed given green-shoots of financial recovery seen in the April-June quarter, a senior government official said, drawing protests from the industry.

The IMG's next meeting could be held on August 16 and there is a possibility that the report may be signed on August 17.

The recommendation of the group will be placed before the telecom commission and ultimately to the Cabinet.

"Green shoots are visible in sector in Q1".

"We have the demands of the industry on the table but what is required or not required is the question", the official said.

As of now, the proposals that are being considered by the IMG include giving telecom companies more time to pay for the spectrum they bought, and if approved such relaxations would improve the cash flow of telecom companies.

However, sources further added that, "The panel is likely to give some relief in form of increased period for payment for spectrum loans to 16 years from the current 10 years".

Right now, a portion of spectrum auction amount is taken as upfront payment by Department of Telecom (DoT) and the balance after a two-year moratorium is paid out every year in 10 instalments.

Another proposal being considered is shifting from PLR to MCLR for interest and penalty payments.

The entry of Reliance Jio on September 5 previous year has forced incumbent telecom firms to cut voice and data tariffs and the stiff competition, price war and reduced revenue has trapped telecom into a highly leveraged sector, part two of the Economic Survey for 2016-17 said.

With an aim to resolve financial stress issue from telecom sector, the inter-ministerial group (IMG) is likely to meet again next week on August 16 or 17. The industry has a debt of Rs 4.6 lakh crore, and has been seeking sops to overcome the crisis.

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