Moratorium of 4 years on telecom dues allows time to transform

The four-year breather from payment of regulatory dues offered as part of the telecom relief package allows operators time to transform and repair, and may cool off price wars and the reforms send out a strong message to the global community, and are expected to bolster the confidence of investors and lenders in the telecom sector.

The Union Cabinet recently approved a blockbuster relief package for the stressed 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 per cent foreign investment through the automatic route. The measures, aimed at providing relief to companies such as Vodafone Idea Ltd that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge for airwaves acquired in future spectrum auctions.

The four-year timeframe is a good enough period to sort out industry's issues on pricing. Operators have four years to transform themselves, which is significant. Players are competent enough to transform themselves. Operators may continue to skim off the bottom or base plans, and attempt to get more 'wallet share' through a wide range of services. As such, AGR re-definition has paved the way for bundling of more non-telecom products like OTT, games, devices.

With this all the operators will be able to sort out their costs and margins, over the next four years. Experts said, Total of a four-year moratorium means, about three years post 5G launch and that is a good enough period for any organisation to transform, restructure and come out of current challenges. This is likely to continue even as the market enters the 5G era. Going forward, operators may not bid for all bands in 5G auctions and, instead, will choose what is best for them. This is because, spectrum will continue to be available subsequently with new reforms.