DoT amends telecom licence norms to relax penal provisions

The DoT has amended licence norms to rationalise the interest rate for delayed payment of licence fee, a move that is expected to ease financial burden on the telecom sector and promote ease of doing business.

The department will now charge 2 per cent interest above the one-year marginal cost of lending rate (MCLR) of State Bank of India for delay in payment of licence fees or any other statutory dues and the interest will be compounded annually.

Earlier, telecom firms were required to pay 4 per cent interest above the one-year MCLR of SBI and the interest was compounded monthly.

"Any delay in payment of licence fee or any other dues payable under the licence beyond the stipulated period will attract interest at a rate which will be 2 per cent above the one- year MCLR of SBI existing as on the beginning of the financial year (namely 1st April) in respect of the licence fees or any other dues pertaining to the said financial year," the amendment said.

The Department of Telecom (DoT) has also removed the licence clause under which telcos were charged a penalty equivalent to 50 per cent of the short payment they made for licence fee. The penalty was imposed if short payment was more than 10 per cent of the payable licence fees.

The amendment has come into effect from October 1. The move is part of telecom reforms announced by the government in September 2021.

The old rules were one of the main reasons for pushing incumbent players into stress after the Supreme Court's verdict on adjusted gross revenue that upheld the government stand and asked telecom operators to pay Rs 1.47 lakh crore statutory dues.

The basic dues were around 26 per cent while 74 per cent component of the total demand got accumulated on account of interest on this amount, penalty and interest on penalty.

Telecom industry body COAI said the move will ease financial stress on the sector and promote ease of doing business.

"We appreciate the step of rationalization of interest rates on delayed payment of License Fee (LF) and any other dues under the licence, removal of penalty and interest on penalty. We welcome this step towards easing the financial stress and promoting ease of doing business in the telecom sector," COAI Director General SP Kochhar said.