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IMG hints at extending deferred spectrum payment timeline by telcos to 16 years

23 Aug 2017 Evaluate

Giving a big sigh of relief to the telecom players, the Inter-Ministerial Group (IMG) on telecom industry, in its latest meeting has hinted on extending the timeline for deferred spectrum payment by telcos to 16 years instead of 10 at present, a proposal that would improve the cash flow of telecom companies. Currently, a portion of spectrum auction amount is taken as upfront payment by the Department of Telecom (DoT) and the balance after a two-year moratorium is paid out every year in 10 installments.

IMG discussed different proposals including convergence between DoT and RBI guidelines on the issue of allowing spectrum as collateral and shifting from prime lending rate (PLR) to marginal cost of funds-based lending rate (MCLR) for interest and penalty payments, pertaining to licence fee and spectrum usage charges.

It was reported that extension of timeline for deferred spectrum payment was one of the proposals that the IMG reached a 'consensus' on. Also there was consensus on shifting from PLR to MCLR for interest and penalty payments with regard to licence fee and spectrum charges. The report is in the drafting stage and the group will meet again to finalise the recommendations to deal with financial stress in the sector.

The IMG will meet again on August 28 or 29 and finalise the report so that it can be placed before the Telecom Commission on September 1. Earlier, the Telecom Minister Manoj Sinha had on August 3 said that IMG will submit its report in 20 days, based on which, the government can take corrective measures.

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