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DoT’s proposal to give telcos 20 years for AGR dues to help revive financially stressed sector: COAI

17 Mar 2020 Evaluate

COAI Director General Rajan S Mathews has said that the Department of Telecom's (DoT) proposal to allow telecom operators pay adjusted gross revenue (AGR) dues in annual installments for over 20 years will improve their cash flow, and the decision to raise tariff by mobile operators will help in reviving the financially stressed sector.  He also said that the operators are interested in buying 5G spectrum which will extend validity of their licence provided they get relief on the same. He added ‘when you talk of 20 years then these operators are intending to buy 5G spectrum at some point of time. There is an effort on DoT's side that there is more competition in the market.’ 

Under the formula suggested by the government, the telecom companies impacted by the verdict of the apex court of October 24, 2019 will be allowed to pay the DoT-assessed dues in annual installments over 20 years (or less if they so opt), duly protecting the next present value of the said dues using a discount rate of eight percent (based on one-year marginal cost of lending rate of SBI which is currently 7.75 per cent)'.

As per the formula, interest on the unpaid amount, penalty, and interest on penalty in relation to the past dues as on the date of the judgement of the Supreme Court will not be levied beyond the date of the said judgement, and the net present value will be protected using the discount rate. It states that the telecom firms would continue to be liable for interest, penalty, and interest on penalty for unpaid dues of licence fee and spectrum usage charge which arises prospectively after the October 24, 2019, date of judgement of the apex court.

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