Cabinet Approves Relief Measures For Stressed Telecom Sector

Modi-led Union Cabinet has given its approval to two measures in telecom sector for facilitating investments and giving a push to ease of doing business. The Cabinet slacken the spectrum holding limit

These two measures include 

• Restructuring the deferred payment liabilities
• Revising the limit of the cap

Restructuring of Deferred Payment Liabilities of telecom Service providers for spectrum

The cabinet has allowed the restructuring of deferred payment liabilities pf telecom service providers by giving them one-time opportunity to opt for higher number of instalment. Maximum 16 instalments can opt. It extends the time period for payment of spectrum bought in an auction to 16 years from the present 10 years. This is based on the principle that the Net Present Value (NPV) of the Payment Due is protected as per respective notice inviting application for the auction of spectrum from 2012. The total amount received will be higher by Rs. 74446.01 crores till 2034-35.

Importance

With the restructuring, the cash flow for the telecom service providers will be increased in the immediate time frame providing them with some relief

Revision of Limits of Cap for Sectrum Holding

As per the recommendations of TRAI and Telecom Commission, the limits of cap for spectrum have been revised.  The overall spectrum cap is revised from the current limit of 25% to 35%. The current intra-band cap is removed. Tthere is a cap of 50% on the combined spectrum holding in the sub-1 GHz bands (700 MHz, 800 MHz and 900 MHz bands). No cap for individual or combined spectrum holding in above 1 GHz band is approved

Importance

The easing of holding caps will give a boost to mergers and acquisitions and spectrum sales as carriers try to dispose of assets, including airwaves, to repay debt.

Telecom Commission's Recommendations

The Telecom Commission (TC) headed by telecom secretary Aruna Sundararajan recommended to scrap the 50% limit on intra-band spectrum holdings of telcos. It decided to impose a separate 50% cap on combined spectrum holdings in the 700 MHz, 800 MHz and 900 MHz bands (sub-1 GHz bands). However, it's unclear if the Cabinet has accepted another TC recommendation 

About TRAI

TRAI stands for Telecom Regulatory Authority of India (TRAI). Established in 1997, this authority works as the regulator of the telecommunications sector in India. It was established by an Act of Parliament to regulate telecom services and tariffs in India. It focuses to create and nurture conditions for growth of telecommunications in India. TRAI regularly issues orders and directions on various subjects such as tariffs, interconnections, quality of service, Direct To Home (DTH) services and mobile number portability.

Expected Questions

Name the head of the Telecom Commission that recommended to revise the limits of the cap for spectrum and restructuring the deferred payment liabilities?

a. Aruna Sundararajan

b. Agrima Sundararajan

c. Arunima Sundararajan

d. Arvina Sundararajan

Under the restructuring of referred payment liabilities of telecom service providers for the spectrum,  time period for payment of spectrum bought in an auction has been extended to ___________ years to __________ years. 

a. 8 years to 12 years

b. 6 years to 10 years

c. 5 years to 8 years

d. 10 years to 16 years

Under the revised limits of the cap for spectrum, the overall cap spectrum has been revised from _____________ to ______________

a. 20% to 30%

b. 15% to 25%

c. 25% to 35%

d. 15% to 30%