In line with the bold reforms announced for the telecom sector, the Government of India has now written to telcos, including Bharti Airtel, Vodafone Idea, and Reliance Jio, asking them to convey by October 29 if they would be opting for the four-year dues moratorium, according to sources.
It has also given 90 days’ time to the operators to indicate if they want to opt for converting the interest amount pertaining to the moratorium period into equity.
Along with this option, the audited financial statements of the immediately preceding financial year (2020-21) may be submitted, according to a letter seen by PTI.
The letters were sent by the Department of Telecom on Friday to individual players, and between them, the content and procedural modalities outlined vary slightly at places.
Recently, the government approved a blockbuster relief package for the telecom sector that includes a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 percent foreign investment through the automatic route.
The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions.
For the past dues, the government has allowed a moratorium or deferment of up to four years in annual payments. But the telecom companies will have to pay interest during the moratorium period.
Also, the government will have an option to convert the due amount pertaining to the deferred payment into equity at the end of the moratorium/deferment period.
It has also given an option to the telcos to pay the interest amount arising due to the said deferment of payment by way of equity.
Last month, Bharti Airtel Chairman Sunil Mittal said the company will opt for the payment moratorium offered in the telecom relief package and redirect the cash flow to aggressively build networks.
With regard to interest dues on payment moratorium, Mittal had said that Airtel will weigh, when the offer comes from the government, on whether to go for equity conversion mechanism or pay cash.
The company's board will take a decision at that point Mittal had said adding that with the interest component working out to Rs 7,500- 10,000 crore, the stake involved may work out to two to three percent in case the company opted for it.
The moratorium will free up cash flow to the extent of Rs 40,000 crore and that amount is sufficient to meet the market's requirements, he had said.(Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.)