Two year moratorium of Spectrum payments: Telecom operators may get short term relief, says Care ratings

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Biznextindia : The Government’s approval to allow telecom operators to defer payment of the spectrum auction instalments could be a short term relief, but they could have to pay more in absolute numbers as interest would be charged, predicted Care Ratings.

“The approval provided by the cabinet comes as an immediate sigh of relief to the telcos that continue to face severe competition and witness pressure on prices. This move will enable them to defer their spectrum auction instalment payments. However, they could pay more in absolute numbers as interest would be charged. Further, this proposal does not really move the needle too much on the AGR payments issue and the government would also need to address the same as payments have to be made as per the norms stipulated by the judiciary. However, it remains to be seen how the industry reacts to this decision” said CARE Ratings in a report.

As per the approval given by the union cabinet on 20th November, the Department of Telecommunication (DoT) will provide an option to the telecom companies to defer payment of the spectrum auction instalments due for 2020-21 &2021-22, either for one or both years. These deferred amounts bill be spread equally in the remaining installments to be paid by telcos. Interest as stipulated while auctioning of the concerned spectrum will, however, be charged so that NPV is protected.

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