Government Said to Form Panel to Address Telecom Woes

Mobile operators in India have been demanding support for a sector squeezed by a price war since late 2016.

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Government Said to Form Panel to Address Telecom Woes

Bharti Airtel recently said it had approached the DoT to "seek clarity" on the amount it had to pay

Highlights
  • The panel comprising senior civil servants will consider ongoing demands
  • It will also look at reducing airwave usage charges
  • Profits of Vodafone Idea and Airtel have been hit

India has formed a panel of bureaucrats to suggest ways to alleviate financial pressures on the telecoms sector, a ministry source said on Tuesday, days after a court order that will push mobile carriers to pay overdue government levies and interest.

Mobile operators in India have been demanding support for a sector squeezed by a price war since late 2016 and by the high cost of using airwaves, culminating last week in that Supreme Court decision upholding a demand by the Department of Telecommunications (DoT) for the nearly $13 billion (roughly Rs. 9,23,071 crores) it said was overdue.

A panel comprising senior civil servants will consider the industry's demands, such as the postponement of airwaves auction payments due for the 2020/21 and 2021/22, the source said.

The panel will also look at reducing airwave usage charges and the contribution levels for the government fund set up to ensure that telecoms services reach rural India in a non-discriminatory way, the source added.

Profits of Vodafone Idea and Bharti Airtel have been hit and some rivals have gone out of business since Reliance Industries' Jio Infocomm unleashed a fierce price war when it entered India's crowded telecoms market in 2016 with free calling and cut-price data.

Vodafone Idea previously said it would ask the federal government for relief on payments of at least $4 billion (roughly Rs. 28,400 crores) after the Supreme Court decision. Analysts had said the charges could force the company out of business.

Rival Bharti Airtel said it had approached the DoT to "seek clarity" on the amount it had to pay, adding that it has sought the government's support to deal with the "adverse outcome" of the court ruling.

It also postponed release of quarterly earnings, which had been scheduled for Tuesday, to November 14.

Shares in Vodafone Idea closed 8.3 percent down while Bharti lost 3.5 percent in a broader Mumbai market that finished with a 1.4 percent gain.

© Thomson Reuters 2019

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