Govt finally answered the distress call from the telecom sector with major reforms
Published On: Wednesday, September 15, 2021 | By: Team KnowMyStock
The Central Government has finally answered the distress call from the telecom sector with a set of reforms that address some of the major grievances of the sector. The contentious definition of the Adjusted Gross Revenue (AGR) has also been revamped with non-telecom revenue excluded from its purview. The telcos have contested the AGR definition and have been burdened with pending AGR dues. FDI reforms have also been announced and will boost investments in this capital-intensive sector. The move will help in bringing robustness to the sector and bring fresh investment to the sector.
The major reforms that have been announced are:
1. AGR: AGR definition rationalised and non-telecom revenue will be excluded.
2. Penalty: Annual compounding in place of monthly compounding and penalty scrapped.
3. Spectrum: Future auctions of the spectrum will have 30 years duration;
. SUC: Spectrum sharing has been allowed; telecom operator can share where they deem beneficial
5. FDI: The government has increased the FDI in the sector under automatic route from 49% to 100%.
6. Licence Raj scrapped: Telecom operators can easily buy equipments
7. Moratorium approved for 4 years for telecom dues. Will help in cash flow of banks and telcos. Those availing it will have to pay interest on moratorium amount @ MCLR + 2%
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