What will be the impact of the telecommunications reform package on the industry? Government issues faq

The telecommunications reform package will help businesses keep operations amid the crisis caused by the Covid-19 pandemic, the central government said on Wednesday when posting an FAQ regarding the new decision.

In addition, he also clarified that companies will not become public sector companies once interest expense has been converted into shares for the government.

Debt-ridden Vodafone Idea (VIL), Tata Teleservices and Tata Teleservices Maharashtra have proposed converting interest expense owed to the government into equity.

VIL’s board of directors proposed to award 35.8% of the shares and Tata Teleservices Maharashtra about 9.5% of the shares to the government.

The government has said it will pay nothing to acquire shares in a telecommunications service provider.

“Certain contributions payable by some of the TSPs are converted into equity / preferential capital in these companies on the basis of options exercised by them in accordance with the telecommunications reform package announced on September 15, 2021,” he said.

On how the shares are acquired in the three companies, he said: “The telecommunications industry has gone through a long period of litigation. As a result, all telecom companies have high amounts of liabilities which are due to various legacy issues. These legacy issues have put pressure on India’s telecommunications industry. “

For this reason, the government said it approved many structural and procedural reforms in September 2021.

“As part of these reforms, TSPs have been given the opportunity to convert some interest expense owed to the government into preferred stock / shares in favor of the government,” he said.

“While some companies have chosen not to convert their liabilities to equity / preferred stock, three companies have exercised the option of converting their liabilities to equity / preferred stock. They offered this option to the government instead of their responsibilities, ”he added.

The government can sell these shares at a convenient time and thus receive the amounts owed.

He said the new reforms “will end a scenario where there are very few players in the market. Such a potential lack of competition could lead to higher prices and poor service. Sufficient competition in the market protects the interests of ordinary people. “

“With the conversion of liabilities into stocks / preferred stocks, the industry has regained the capacity to invest and provide better services. Companies also retain the option of investing so that telecommunications services can reach remote areas, ”he said.

Meanwhile, Telecommunications Minister Ashwini Vaishnaw said earlier today that current and future debts will continue to fall on the carriers who have offered to convert their interests into shares for the government.

“The government will remain an investor only. The companies will be run by professionals. All debt liabilities will remain the responsibility of the companies. The companies have given us a commitment,” Vaishnaw said, as quoted by the news agency. PTI.

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