Moratorium on AGR Dues a Win-Win Formula; Cash Flow Freedom Will Help Telcos on 5G: Vaishnaw

Moratorium on AGR Dues a Win-Win Formula; Cash Flow Freedom Will Help Telcos on 5G: Vaishnaw

With the Cabinet approving a relief package for the telecom sector while announcing a moratorium of four years on Adjusted Gross Revenue (AGR) dues, telecom minister Ashwini Vaishnaw, in an exclusive interview with Prashant Nair and Reema Tendulkar of CNBC-TV18, said the four-year moratorium with NPV protection is a win-win formula.

“The focus of the relief package was on reforms, especially the long contentious, highly litigated issues like AGR should be solved, and the industry should move forward. We wanted the package to be revenue neutral and that is why 4-year moratorium with net present value (NPV) protection is a win-win formula.”

The package will help India’s three major wireless carriers including Mukesh Ambani’s Reliance Jio, and Vodafone Idea.

The government and customers want healthy competition in the sector, the minister said.

“From our perspective and from customer’s perspective, we want healthy competition in the sector. Healthy competition will be achieved by three things – first, distressing the balance sheets, second having the reforms which were needed in the sector and third the quality of service that the operators provide to the customers.”

The minister also pointed out that all the three things combined will define whether the industry further consolidates or more players come in. “We would like more players to come in.”

He said cash flow freedom will allow telecom companies to move forward to the 5G play.

“This is the time when the transition will happen from 4G to 5G and that requires lots of technological investments, infrastructure investments, so looking at overall picture, having a cash flow freedom for next 4-years is a very big thing. The interest cost on that is not a very huge cost. In my interactions with telcos, they have been very happy because this gives them a chance to move forward to the 5G play.”

Currently, Vodafone Idea has a total liability of Rs 1.92 lakh crore. Of this, it owes ₹58,000 crore to the government as AGR dues. The rest of the amount includes spectrum-related dues and bank loans. In July, the Supreme Court had dismissed the telecom company’s plea to allow payment of self-assessed AGR dues that are way lower than that demanded by the telecom department.

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