Big relief for telecom sector! Centre approves 4-year moratorium on AGR dues

The government on Wednesday took a major step in helping the debt-ridden telecom sector in the country. The Union Cabinet today approved a four-year moratorium on the AGR (adjusted gross revenue) dues which are to be paid by telecom operators in the country. Announcing the slew of changes, Union Telecom Minister Ashwini Vaishnaw today announced that all non-telecom revenue will be taken out of AGR, which in turn would change the definition of term.

“AGR definition is rationalised, non-telecom revenue won't be included in AGR definition,” the Union Telecom Minister said while announcing the changes, which includes 100% FDI in the telecom sector via automatic route. These measures are expected to ease the cash flow issues being faced by some telecom companies in the country.

Apart from changing the definition of AGR, Vaishnaw also said nine structural reforms had been announced for the telecom sector. "In the telecom sector, nine structural reforms and five process reforms have been approved by the cabinet. These reforms will change the framework of the entire telecom sector. They will deepen and broaden the industry,” Vaishnaw said today.

Announcing the measures, the Union Telecom Minister said that a reasonable interest rate of MCLR along with a 2% interest rate has been offered and the penalty has been completely scrapped. This will pave the way for large-scale investments in the telecom sector. Investment means employment - more the investment, more the employment.

“There was a regime of heavy interest, penalty and interest on penalty on payment of license fees, spectrum user charges and all kinds of charges. It has been rationalised today. Annual compounding (of interest) will be done instead of monthly compounding,” he added.

In addition to this, Vaishnaw told the reporters that spectrum sharing will be allowed and that it has been made completely free. For future spectrum auctions the minister said that the duration of the spectrum will be 30 years instead of 20 years. “Also, if someone takes spectrum and business conditions/technology changes then after a lock-in period of 10 years it can be surrendered by paying spectrum charge,” he added.