MUMBAI: The government may shortly reduce licence fees of telecom companies from 8% to either 5% or 6%, in what would be a second major step to revive an industry struggling with high debt amid intense competition which has dragged revenue and profitability.
According to two senior government officials, a meeting at the highest levels of the government is scheduled for this week to discuss scaling down the licence fees which, industry experts say, will save the three telcos a combined Rs 4,000-5,000 crore annually.
Industry experts said that while a licence fee cut will give some relief, it won’t be enough to stave off the balance sheet dangers of the likes of Vodafone Idea and Bharti Airtel
These two telcos face statutory dues of over Rs 53,000 crore and Rs 35,500 crore, respectively, due to a Supreme Court order widening the definition of adjusted gross revenue (AGR).
“The government cannot do anything about the AGR dues, which has been decided by the Supreme Court. From the initial suggestions of relief measures, a licence fee cut will be taken up now following the two-year spectrum moratorium already announced,” said a senior official, who did not want to be named.
Another person aware of the developments said that once a decision is taken, it will be sent to the Cabinet to be ratified.
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