Telcos seek soft loans, levy cuts to ease stress

India’s top telcos -- Reliance Jio Infocomm, Bharti Airtel and Vodafone Idea -- have sought finance minister Nirmala Sitharaman’s urgent intervention, urging the government to boost the liquidity levels of the debt-laden telecoms industry by offering a combination of soft loans against GST input credits and cutting key levies such as licence fees and spectrum usage charges (SUC).

The Cellular Operators Association of India (COAI), in a letter to Sitharaman, dated June 26, has underlined the criticality of such pending relief measures, saying these are absolutely essential for the cash-strapped sector to grapple with the adverse economic fallout of Covid19, which continues to spread rapidly across the country.

The COAI represents Jio, Airtel and Vodafone Idea.

“Given the adverse impact on the economy and operations of the digital communications industry due to Covid-19, we request that soft loans at a marginal cost lending rate (MCLR) be given to telecom companies using GST input credits as collateral and that the high burden of regulatory levies also be rationalised by reducing licence fee and SUC payouts immediately,” COAI director general Rajan Mathews wrote in a letter to Sitharaman. ET has seen a copy of the letter.

The telcos have urged the FM to expedite steps to cut SUC to 3% of a telco’s adjusted gross revenue (AGR) and reduce licence fees to 3% of revenue from 8% now.

Further, the phone companies, in their letter to the FM, have reiterated their demand that all telco payments towards spectrum debt, licence fees and SUC should not be classified as `services’, and accordingly, must not attract any goods & services tax (GST). In addition, they have sought exemption from service tax on the amounts of licence fees and SUC payable in compliance with a Supreme Court order.

Mathews has pointed out to the FM that since the outbreak of Covid19, the load on telco networks has seen an exponential surge, especially as vast swathes of corporate staff continue working from home and both government agencies and private companies also extensively use wireless internet networks to stay virtually connected.

“Ensuring continuity of these (telecom) services is of utmost importance in these challenging times, which is why, the criticality of immediate relief measures from the government,” Mathews said.

The telecom industry’s call for relief from the finance ministry comes even as the Supreme Court’s final views on the AGR case is awaited. The nation’s top court will hold the next hearing on the AGR case in the third week of July, by when the telcos – Bharti Airtel, Vodafone Idea and Tata Teleservices -- and the government have been directed to finalise a roadmap for payments of balance licence fee and SUC dues, which may also include an upfront payment clause.

The impacted operators have sought 20 years to clear their AGR dues, but the apex court has said they need to make some upfront payments to avail of a deferred payment mechanism.