Government is evaluating to address the crisis in the sector without stepping off on the Department of Telecommunications' (DoT) position that telcos have to pay their dues.
Although, the Supreme Court in its verdict of October 2019 had ordered telcos to pay up Rs 1.47 lakh crore agasint the adjusted gross revenue (AGR), telcos did not abide by its order.
Two officials of the government said that it is considering various options because it want telcos to stay in thee business, if it goes out of business then it may adversely affect the sentiment's of investors, would restrict consumers' choice and increase stress in the banking sector.
Also Read: India's second-largest telco Vodafone Idea on the verge on bankruptcy amid AGR dues
The government officials, who doesn't want to named, said soft loans is another option which can be considered, although it was not promptly clear who would underwrite the cost of these.
It has also been added by the officials that since the telcos have raised the questions about the computation of the amount, an independent agency or an audit firm could recalculate the adjusted gross revenue.
The package, however, will be in confinement of the apex court's judgement, affirmed officials.
On February 14, the Supreme Court thundered onto DoT and telcos for not abiding by its original oder, hence, summoned the managing directors of the companies to court on the date of the next hearing (March 17) if they had not paid up by then.
"The government has sought legal opinion in the light of recent verdict of the Supreme Court before it will take a final call in a day or two," one of the two officials said.
As per the saying of officials, at least three senior cabinet ministers are directly involved in this matter. On Thursday, Bharti Airtel chairman Sunil Mittal met telecom minister Ravi Shankar Prasad. Mittal said, "AGR is an unprecedented crisis for industry, which is being dealt with by government." On Wednesday, Mittal and Vodafone Idea chairman Kumar Mangalam Birla met finance minister Nirmala Sitharaman individually.
Last week, DoT asked all telecom companies to immediately repay AGR dues as per the October 24, 2019 verdict of the Supreme Court. According to the verdict telcos were expected to pay AGR dues of about Rs 1.47 lakh crore by January 23, 2020. Airtel owes around Rs 35,000 crore and Vodafone about Rs 55,000 crore.
Airtel paid Rs 10,000 crore on Monday and Vodafone has so far paid Rs 3,500 crore. After paying the amount on February 17, Airtel said in a letter to the DoT that the payment was made on an “ad-hoc, on account” basis as the company was in the process of “completing the self-assessment exercise expeditiously” and would duly make the balance payment upon completion of the same before the next hearing of the Supreme Court, which is on March 17.
However, spokespersons of finance ministry, ministry of telecom, law ministry and Airtel declined comment and a Vodafone Idea spokesperson was not immediately available for comment.
The first official said the government is listening to certain concerns of the telecom companies and wants to help them. "Closure of any telecom company would limit competition, aggravate unemployment and have adverse impact on their lenders," he said.
According to industry experts clampdown of one of the big three telcos--Airtel and Vodfone Idea which together serve around 60% of subscribers, would mean direct and indirect loss of employment to about 1 lakh people and will shake the banking sector's finance as it is yet recover from massive crisis of non-performing assets (NPAs).
Subhash Chandra Garg, former finance secretary said that closure would mean "NPAs will get transmitted to banks, if bank guarantees are encashed."
Garg further added, "The duopoly of Jio-Airtel would not be in the interest of country. India needs a healthy and competitive telecom sector. It would be in national interest if Vodafone survives as a strong player." His reference is to Reliance Jio, which had to pay only Rs 195 crore and has already cleared the dues.
Birla at one of the conferences with news agency had said that Vodafone Idea would have to shut shop if the company does not get any relief. “If we are not getting anything, then I think it is the end of story for Vodafone Idea,” he said.
“They (government) have publicly stated that they want three players from the private sector and one player from the public sector, so I think we can expect much more stimulus from the government because it is required by the sector to survive,” said Birla.