IMG sees 'green shoots' in telecom sector, policy intervention not required


Business, Economy

The inter-ministerial group was constituted to look into the financial stress in telecom sector.

Large scale policy intervention may not be required for telecom, according to an inter-ministerial group on telecom.

New Delhi: Large scale policy intervention may not be required for telecom as "green shoots" have become visible in the sector during first quarter, according to a source in the inter-ministerial group on telecom.

At the same time, the group is considering certain measures, including increasing period of deferred spectrum payments to 16 years, a proposal that could bring some relief to the industry.

The inter-ministerial group - constituted to look into the financial stress in telecom sector and give its recommendations - met here on Friday to discuss the issues.

The sources said the next meeting could be held on August 16 and there is a possibility that the report may be signed on August 17.

The recommendation of the group will be placed before the telecom commission and ultimately to the Cabinet. Emerging from the one hour meeting, the source who

participated in the meeting said that the general thinking in the IMG is that big bang policy intervention may not be required given the "green shoots" that are now visible in the industry.

However, the source said that a final decision on the matter has not been taken and further discussions will be required.

"We have the demands of the industry on the table but what is required or not required is the question," the official said.

As of now, the proposals that are being considered by the IMG include giving telecom companies more time to pay for the spectrum they bought. If approved such proposed relaxation will improve the cash flow of telecom companies.

Currently, a portion of spectrum auction amount is taken as upfront payment by Department of Telecom (DoT) and the balance after a two-year moratorium is paid out every year in 10 instalments.

The telcos may be given 16 years instead of 10 years for such deferred spectrum payment, another member of IMG said.

The other proposals being discussed include convergence between DoT guidelines and RBI guidelines on the issue of allowing spectrum as a collateral.

Another proposal being considered is shifting from PLR to MCLR for interest and penalty payments.

The inter-ministerial group, in June, had held extensive consultation with all telecom players and large banks on the industry's financial difficulties.

Large operators have been flagging pressure on profitability and revenue, and have blamed competition intensified by the entry of newcomer Reliance Jio for their woes. The industry has a debt of Rs 4.6 lakh crore, and has been seeking sops to overcome the crisis.