Extend payment term for telecom dues, charge lower interest: COAI

Rajan Mathews, Director General of Cellular Operators Association of India, or COAI, says the government should redefine AGR on the basis of what TDSAT and the industry have been asking for. Excerpts from an interview with ETNOW.

News agencies are reporting that may be the government is open to hearing telecom companies’ suggestions to help ease the burden of AGR dues. What nature could this suggestion be of? It seems like it is a given that AGR dues will have to be paid, but maybe a timeline extension. Is that where we are heading to?
We have been suggesting a couple of things to the government: one is going forward obviously extended payment terms at interest rates that are not retail, but more wholesale in nature. That is one of the areas we have highlighted, which is the debt portion. Secondly, what we have talked about is to now redefine AGR on the basis of what TDSAT and the industry have been asking for. If we can do that prospectively, there is nothing at DoT’s end, which would mitigate against that. Once that is done prospectively, we can also look at what TRAI has supported and what the DoT has supported, which is a reduction in licence fee payment from 8% currently to maybe 3-5% or so, initially, and the SUC – which is the spectrum usage charge – from 5% currently to a lesser amount. So a combination of those issues coupled with tariff increases that have been now put in place by the operators begin to lay the foundation for a prospective move towards addressing the immediate problem financially and otherwise of the operators.

If they give you something like a 10-year period to make these payments, will that along with the price discipline that is coming back to the sector be sufficient for having a healthy telecom sector?
Increasing the term of the debt payments to 10 years without the other elements, which are addressing the interest component, the rate at which that has to be repaid plus a significant adjustments in the definition of AGR, plus reductions in LF and SUC should be the total package. I do not believe just extending the term to 10 years in itself is going to provide the relief that the operators will be looking for.