NEW DELHI: In a big relief to telecom companies, especially debt-strapped companies like Vodafone Idea Ltd, Bharti Airtel Ltd and Reliance Communications which owed nearly Rs 92,000 crore to the Centre as license fee and Rs 41,000 crore as spectrum usage fees, the Union Cabinet today announced a moratorium of four years for the payment of the Adjusted Gross Revenue (AGR) dues.

The definition of AGR which refers to revenues that are considered for payment of statutory dues, which has been a major reason for the stress in the sector, has now been rationalised by excluding non-telecom revenue of telecom companies.

Making the announcement telecom minister Ashwini Vaishnaw said that apart from a four-year break for companies from paying statutory dues the government has also approved permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route.

Among the other reform measures include, increasing the tenure of the spectrum from 20 to 30 years, surrender of airwaves allowed after 10 years, no SUC for spectrum acquired in future auctions, additional SUC of 0.5 per cent for spectrum sharing removed, and 100 per cent FDI.

The revised procedural reforms include a fixed calendar for spectrum auction, removal of the cumbersome requirement of licenses for wireless equipment, allowing self-KYC (app-based), e-KYC rate revised to only Re 1, paper Customer Acquisition Forms (CAF) to be replaced by digital storage of data, and the Department of Telecom will accept data on a portal based on self-declaration.

Vaishnaw said, "It is also important to save government revenue, so interest on the moratorium will have to be paid. This will reduce the stress of cash flow in the industry. Annual compounding (of interest) will be done instead of monthly compounding. A reasonable interest rate of MCLR + 2% interest rate has been offered and the penalty has been completely scrapped. This will pave way for large-scale investments in the telecom sector."

On the cost of the package, the minister said that it was 'revenue neutral' for the government and there was no number to the amount of the package. "As the measures have to be looked at from the perspective of this industry. "The reforms are structural and they are going to make a difference. It is going to give sustainable growth to the industry," he said.

Kumar Mangalam Birla, ex-Chairman of Vodafone Idea Ltd, had earlier written to the Cabinet Secretary offering his stake in the company to the government or any entity approved by it for free. After a few days of his letter, he quit as chairman of the company on August 4.

Vodafone Idea had a total debt of Rs 1,91,590 crore as of June 30 which includes deferred spectrum payment obligations of Rs 1,06,010 crore and an adjusted gross revenue liability of Rs 62,180 crore.

In October 2019, the Supreme Court had mandated that telecom operators pay Rs 1,19,292 crore to the Department of Telecommunications as AGR dues, although later in September 2020, it granted 10 years to the operators to make staggered payments of the AGR dues, including penalty, interest and interest on the penalty.