Government working on relief package for telecom sector

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The government is preparing a relief package for the telecom sector which is under severe financial stress at present owing to various reasons. The development comes a day after Kumar Mangalam Birla offered Aditya Birla Group’s stake in struggling Vodafone-Idea to government entities to keep the company operational.

Quoting unnamed officials, the Economic Times reported that the telecom department is firming up a relief package to allow the surrender of spectrum, reduce bank guarantees, phase out levies and prospectively define AGR to provide relief to the sector as well as Vodafone Idea. The report also said that officials ruled out any immediate response to Birla’s letter.

Birla’s letter

“It is with a sense of duty towards the 27 crore (270 million) Indians connected by VIL, I am more than willing to hand over my stake in the company to any entity – public sector/government/domestic financial entity, or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in a letter.

Birla has also sought clarity on long-standing issues such as AGR (Adjusted Gross Revenue) dues, an adequate moratorium on spectrum payments, and a floor price regime.

SC verdict

Earlier in July, the Supreme Court had said that AGR dues cannot be recomputed. Bharti Airtel, Vodafone Idea and Tata Teleservices had moved the apex court seeking correction in calculation errors in the Department of Telecommunications’ (DoT’s) AGR demand.

The relief package, now underworks, would be sent to the finance ministry by next week and an announcement is likely by month-end, according to the newspaper report.

Shares of Vodafone Idea on Tuesday fell over 10% after Birla’s letter to the government surfaced in the media.