The government asks telecommunications operators to announce their choice of a moratorium on contributions by October 29

In line with the bold reforms announced for the telecommunications sector, the government has now written to telecommunications operators, including Bharti Airtel, Vodafone Idea and Reliance Jio, asking them to let them know by October 29 whether they would opt for a moratorium of four years on contributions, according to sources.

It also gave operators 90 days to indicate whether they wish to opt for the conversion into equity of the amount of interest relating to the moratorium period.

Along with this option, audited financial statements for the previous fiscal year (2020-2021) may be submitted, according to a letter seen by PTI.

The letters were sent by the Department of Telecommunications on Friday to individual players, and between them the content and procedural details described vary slightly in places.

Recently, the government approved a highly successful aid plan for the telecommunications sector which includes a four-year suspension for companies from the payment of statutory contributions, the authorization to share rare airwaves, a change in the definition of income on which the levies are paid and 100% foreign investment. by the automatic route.

The measures, aimed at relieving companies such as Vodafone Idea that have to pay thousands of crore in unfunded past statutory contributions, also include the removal of spectrum usage charges (SUC) for airwaves acquired in future spectrum auctions. .

For past contributions, the government has allowed a moratorium or deferral of up to four years in annual payments. But telecommunications companies will have to pay interest during the moratorium period.

In addition, the government will have the option of converting the amount due relating to the deferred payment into equity at the end of the moratorium / deferment period.

It also gave the possibility to telecom operators to pay the amount of interest resulting from said suspension of payment as equity.

Last month, Bharti Airtel chairman Sunil Mittal said the company would opt for a payment moratorium, offered as part of a telecoms relief package, and redirect cash flow to aggressively build networks.

Regarding the moratorium on interest on payments, Mittal had said Airtel would weigh, when the offer comes from the government, on whether to opt for a stock conversion mechanism or to pay in cash.

The board of directors of the company will make a decision at that time, Mittal said, adding that with an interest component amounting to Rs 7,500 to 10,000 crore, the stake involved could reach 2 to 3. %, in case the company chooses.

The moratorium will release cash flow to the tune of Rs 40,000 crore and this amount is sufficient to meet market demands, he said.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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