Will Modi govt manage to 'save' the beleaguered telecom sector?

Attempts are being made to balance the need for health of the sector, consumer interest while complying with the Supreme Court order on statutory dues.

Amid a deepening crisis in the telecom sector, the government is looking to strike a balance between complying with the Supreme Court order on AGR dues, ensuring health of the sector and safeguarding consumer interest, even as Bharti Airtel's Sunil Mittal continued to seek prompt measures.

Vodafone Idea Ltd, the company that is said to be the most vulnerable following the apex court's order, paid another Rs 1,000 crore on Thursday, while Mittal's Bharti Airtel promised to clear all dues, as per its calculations, "expeditiously" and before March 17 deadline.

But Mittal, who followed up his meeting with Finance Minister Nirmala Sitharaman on Wednesday with another one with Telecom Minister Ravi Shankar Prasad on Thursday, wanted the government to cut taxes for the health of the sector.

A top government official, who did not wish to be named, said the attempts are being made to balance the need for health of the sector, consumer interest while complying with the Supreme Court order on statutory dues.

Although the official did not elaborate, sector watchers said the statement alludes to the government keen on ensuring adequate competition by retaining the present three-plus-one model of competition (three private players and one public sector company).

Vodafone Idea, which as per the Department of Telecommunications (DoT) owes over Rs 53,000 crore in dues, paid Rs 1,000 crore more to take its total payout this week to Rs 3,500 crore.

This together with Rs 10,000 crore that Bharti Airtel had paid and another Rs 2,197 crore paid by Tata Teleservices has taken the payments collected so far to almost Rs 16,000 crore.

Some companies have assured they will make additional payments in the next 7-8 days, the sources said.

The government will, meanwhile, verify the companies' claims on AGR-math and examine any deviations from its own calculation, through random 'test checks' before March 17, sources said.

This will be done by the government doing a 'test check' for any one year (of telcos' dues) to examine variances between telecom companies' assessment and the government calculation of AGR liabilities.

The 'test check' will happen for all telecom firms, but will start with those which have already claimed they have made full and final settlement towards their statutory liabilities.

The exercise will help the department assess the gap between telcos' claim of what their adjusted gross revenue (AGR) dues are and its own estimates, sources added.

Since the February 14 tongue lashing Supreme Court gave telecom companies for missing its previous deadline of January 23 to pay past dues as well as the Department of Telecommunication (DoT) for failing to enforce it, firms and Prasad's ministry are doing separate maths on the actual dues.

The DoT had previously estimated Rs 1.47 lakh crore as dues, including penalty and interest, from Bharti Airtel, Vodafone Idea and other firms.

But telecom firms say the amount should be lower.

The DoT too is doing its own stress test to double-check telcos' numbers.

Emerging from the meeting with the telecom minister, Mittal termed AGR as an "unprecedented crisis" for the industry.

Stating that the telecom sector is "heavily taxed", Mittal said levies need to be looked at as the industry has low revenue left in the kitty.

He said that the government is fully focused towards the digital sector, and all discussions so far indicate that "government is alive to the situation".

"...the AGR hit that has come in, also needs to be dealt with," Mittal said.

Mittal said that he has assured the Minister that the company is committed to complying with the SC judgement, and that balance payments will be made "expeditiously".

"We have time till March 17, much before that we will finish everything," he pointed out.

Mittal said that he had pitched for measures for sustainability of the sector, through rationalisation of taxes and levies.

On whether the issue of setting floor price for tariffs also figured at the meeting with the Minister, Mittal said that was under the TRAI's domain.

"But it is also true that the industry's revenue has collapsed and that needs to go up.

“We talked of rationalisation, reduction of taxes, levies, this has been our demand for a long time...the regulator has been supporting it," Mittal said.

Earlier in the day, Telecom Regulatory Authority of India (TRAI) chairman RS Sharma also met the telecom minister but did not comment on the details of the meeting.

Photograph: Rupak De Chowdhuri/Reuters