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20-Feb2018

Cabinet to soon decide on relief package for telecom sector

The cabinet is likely to decide next month on the relief package recommended by the inter-ministerial group (IMG) for the telecom sector which is reeling under financial stress. IMG had recommended a few measures for the sector including giving more time to telecom companies to pay for the spectrum they buy and increasing the holding limit of radiowaves. The Telecom Commission, the apex decision-making body at the Department of Telecom, has cleared some of the key recommendations made by IMG formed to chalk out relief measures for the debt-ridden sector.

The Telecom Commission had approved extension of time period for the payment of spectrum bought in auctions by telecom companies to 16 years from the current 10 years, as recommended by the IMG. It had also approved the IMG's recommendation to lower the interest rate on penalties paid by telecom operators by about 2 percent. Last month, the panel concurred with sectoral regulator the Telecom Regulatory Authority of India's (Trai) suggestion to raise spectrum holding limit of mobile operators which will ease the exit route for those under stress. The Trai had recommended last month the removal of ceiling on spectrum held by mobile operators within a particular band, while suggesting a 50 percent cap on combined radiowave holding in efficient bands like 700 MHz, 800 MHz and 900 MHz. Trai had also suggested that the overall cap on holding spectrum should be raised from the current 25 percent to 35 percent.

According to the current rules, no mobile service provider can hold more than 25 percent spectrum, vital for transmitting signals, in an area and more than 50 percent in a frequency band. If these suggestions are accepted by the Department of Telecom (DoT), they would provide a major relief for the soon-to-be-merged Idea Cellular and Vodafone, as they would have breached the spectrum cap in certain locations under the existing rules. It would also enable aggressive newcomer Reliance Jio to pick up additional spectrum, if needed, in bands like 800 MHz.


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