Cabinet approves relief package for debt-ridden telecom sector

ET Bureau|Updated: Mar 07, 2018, 07.42 PM IST

Announcing a relief package for debt-ridden telecom sector, the Union Cabinet today relaxed spectrum holding caps. This will give a boost to M&As and spectrum sale, as carriers try to sell assets, including airwaves, to repay debt. 

The Cabinet also extended the payments tenure for auctioned airwaves from 12 years to 16 years, and lowered the interest rate on penalties on outstanding dues of telcos from 14 per cent to 12 per cent. 

The government increased the overall airwave holding limit to 35 per cent from 25 per cent. Current government rules bar any merged entity from holding more than 25 per cent of the spectrum allocated in a service area or circle, and over 50 per cent in a particular band. 

“With the restructuring of the deferred payment liability, the cash flow for the telecom service providers will increased in the immediate time frame providing them some relief,” the government said after approving two key measures to facilitate investments, consolidation and ease of doing business in the telecom sector. 

“Revising the limit for the spectrum cap holding will facilitate consolidation of telecom licenses and may encourage the participation in future auctions,” the government added, in a statement. 

The Cabinet endorsed the recommendations of the Telecom Commission, headed by telecom secretary Aruna Sundararajan, to do away with the 50 per cent cap on intra-band spectrum holdings of telcos. Instead, it decided to impose a separate 50 per cent cap on the combined spectrum holdings in the 700 MHz, 800 MHz and 900 MHz bands (sub-1GHz bands).