Finace And Stock

Reforms 2.0 in works to create robust telecom companies, says Ashwini Vaishnaw

The government is working on a second set of reforms for the telecom sector aimed at creating strong mobile phone operators that can expand overseas while connecting the remotest corners of the country, communications minister Ashwini Vaishnaw told ET in an interview. This will follow policy changes announced two weeks ago aimed at relieving stress on the sector and helping to preserve the current market structure.

Vaishnaw, also the cabinet minister for information technology and railways, added that spectrum pricing should factor in the point about telecom services being for the “public good”. Thus, the pricing should also leave enough resources in the hands of operators to be able to invest in expanding their networks and providing quality services.

When asked whether

‘s promoters – the Aditya Birla Group (ABG) and UK’s Vodafone Group – had committed to further investment in the company, the minister said, “They have discussed infusion of equity into the company. However, the exact details would be announced by them as and when they finalise.”

Weighing in on a global debate, Vaishnaw said online platforms need to remunerate original creators and publishers of content “adequately” for all the intellectual property (IP) they produce. He added that the matter needed to be thoroughly analysed.

‘Plan to Reduce Litigation in Sector’

Commenting on the next set of reforms, he said the pricing and the payment mechanism for auctions are being worked on and the measures will be announced soon. “It (spectrum) should be auctioned. But the question here is how to auction? How to work out the terms of payment?” said the minister.

Government also wants to reduce litigation in the sector and enable telecom operators to become globally competitive. “(Telecom sector) reforms will primarily aim to strengthen the industry to enable it to fight it out in India and abroad,” he said. “Why can’t we have Indian operators in the US, Europe, and other international destinations? Why should we just have international operators coming to India and not the other way round? We will do whatever is needed to keep the sector healthy.”

He added that the government wants operators to focus on networks, to be able to serve the remotest corners of the country. “That requires sufficient resources in the hands of the telecom operators,” Vaishnaw said. “For that they need to be healthy. Today, with the current structure of the industry, it cannot happen.”

Telcos say the high price of spectrum and a faulty auction mechanism were at the heart of the current stress in the sector, which has run up a debt of over ₹8 lakh crore, with returns on capital in the low single digits.

To address the financial stress and prevent cash-strapped Vodafone Idea from going bankrupt, the government announced wide-ranging reforms two weeks ago. The package includes the option to defer payment of statutory dues to the government by four years such as adjusted gross revenue (AGR) and spectrum payments and convert government dues to equity. The measures also include eliminating spectrum usage charges from future auctions, a drastic reduction in bank guarantees and permitting telcos to surrender unused spectrum.

He rejected a news report that said the government was considering legislation or an ordinance to back up the telecom package, saying the steps were well within the scope of the Supreme Court’s AGR verdict. “Firstly, the entire (AGR) payment has to be made within 10 years. Secondly, reassessment (of AGR dues) shouldn’t happen. So, those two boundary conditions remain unchanged – courts are reasonable,” the minister said.

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