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Telecom stocks decline
(09:29, 21 Nov 2019)

Meanwhile, the S&P BSE Telecom index was down 2.38% at 1,054.50.

Bharti Airtel was trading lower by 1.15% to Rs 432.20. Vodafone Idea was trading 10.47% lower at Rs 6.33. Reliance Industries was trading 0.39% lower at Rs 1,541. Reliance Jio Infocomm, a subsidiary of Reliance Industries, is a telecommunications company.

The Union Cabinet yesterday, 20 November 2019 has approved the proposal for mitigating financial stress being faced by the telecom services sector.

Department of Telecommunication will give an option to the Telecom Service Providers (TSPs) to defer payment of the spectrum auction instalments due for 2020-21 & 2021-22, either for one or both years. These deferred amounts bill be spread equally in the remaining instalments to be paid by TSPs. Interest as stipulated while auctioning of the concerned spectrum will however be charged so that NPV is protected.

Deferment of spectrum auction instalments will ease the cash outflow of the stressed TSPs and facilitate payment of statutory liabilities and interest on bank loans. Improved financial health of TSPs will facilitate maintenance of quality of services to consumer.

The decision for deferring spectrum payment instalments for two years will be implemented within a fortnight.

The Supreme Court (SC) on 24 October 2019 ruled in favor of the government on the AGR (adjusted gross revenue) issue, with grave revenue implications to the tune of over Rs 92,000 crore for the ailing telecom sector.

AGR is the basis on which Department of Telecommunications (DoT) calculates levies payable by operators. Telecom operators are liable to pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.

Telcos argued that AGR should comprise revenue from telecom services, but DoT insisting that AGR should include all revenue earned by an operator, including that from non-core telecom operations.

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