September 17 2021: Telecom industry associations, key players and analysts have commented on the relief package announced by the Indian government:
All India Fixed Internet Service Providers Association (AIFISPA): While Welcoming the reforms and relief package announced by the Government of India, AIFISPA hopes that the Government will take similar path breaking and much needed reforms for the Fixed Line Broadband Service providers in the country, which will help the industry to fulfil the national broadband mission. Fixed line Broadband involves 1200 plus small Internet Service Providers (ISP) across the country and has delivered much needed high speed connectivity during the pandemic. The fixed line broadband players have enabled entire industry to seamlessly transition to “work from home setup”, keeping the wheels of the economy running. School from home, tele medicine, video conferencing, streaming entertainment, are all some of the ways in which fixed broadband players have critically supported and enabled everyday lives during this pandemic. This yeoman’s service was rendered by lakhs of on-field employees relentlessly braving the virus in pursuit of the prime purpose of keeping customer connected. Further, fixed Internet Industry is set to play a critical role in building a ‘Digital India’ and support the Union Government’s initiatives to enhance fibre optic infrastructure across the country as envisioned under NDCP 2018 and the National Broadband Mission.
Reliance Jio heartily welcomes the reforms and relief package announced by the Government of India, as these are a timely step towards strengthening India’s telecom sector. Jio's mission is to bring the fruits of the Digital Revolution to 1.35 billion Indians.
The Government’s telecom sector reforms will encourage us to bring newer and greater benefits to our customers.We look forward to working with the Government of India and other industry players in reaching all the goals and milestones of the Digital India vision, so that we can collectively make every sector of the economy productive and enhance the Ease of Living for every Indian.
Mukesh D Ambani, Chairman, Reliance Industries,dded:, “Telecom sector is one the prime movers of the economy and the key enabler for making India a Digital Society, I welcome the Government of India’s announcement of reforms and relief measures that will enable the industry to achieve the goals of Digital India.”
Sunil Bharti Mittal, Chairman, Bharti Airtel : We congratulate and thank the Government, who under the decisive leadership of the Prime Minister Narendra Modi, has undertaken these seminal reforms to lift an industry that’s at the core of his Digital India vision. The latest reforms ensure that the industry is able to invest fearlessly and support India’s digital ambitions. Bharti Airtel is fully committed to respond to the call by the Hon’ble Prime Minister to invest in and accelerate India’s growth. What lies ahead is a once in a lifetime opportunity to build the digital infrastructure that is a catalyst for the digital aspirations of over one billion Indians.
India’s digital economy has entered a phase of exponential growth with digital solutions contributing to fast and inclusive growth by bringing more and more people online. India has the potential to become one of the biggest digital ecosystems in the world as the country moves towards achieving the USD 5 trillion GDP goal set by the Government. Next generation telecom networks with technologies such as 5G will be the spine that will support India’s digital ecosystem and spur economic growth. A healthy telecom industry will also spur innovation and investments in allied industries like network equipment, smartphones, data centres, etc. and help create large number of jobs and contribute to India’s Atmanirbhar vision.
Akshat Jain, Partner, J Sagar Associates: The package announced by the Government aims to usher in structural reforms by infusing investor confidence and provide flexibility to telecom operators with respect to spectrum sharing, surrendering spectrum usage rights etc. One of the key announcements is allowing 100% FDI in the sector which was limited only to 49% from the automatic route. The other significant announcement is to have certainty for auctions in the sector which are slated to be conducted mostly in the last quarter of a financial year. These measures will certainly provide better planning by operators. However, the liability to pay AGR dues continues. The deferment for AGR dues cannot be construed as waiver since the package only envisages a moratorium of four years on such AGR dues from October1 2021 (appointed date) with the interest and penalties accruing for such deferral. On other issues such as spectrum payments, bank guarantees etc., the relief appears to be prospective in nature. While this will temporarily provide some relief, it does not essentially alleviate the already bleeding balance sheets of the telecom operators since the dues will ultimately have to be paid with interest. It will be interesting to see whether these measures promote competition in the sector and achieve the desired objective.
Aditi Nayar, Chief Economist, ICRA Limited: Based on the package announced by the Government of India, we have assessed its deferment of non tax revenues at Rs. 46,000 crore per year for four years starting from FY2023. This comprises Rs. 14,000 crore related to the moratorium on AGR dues and Rs. 32,000 crore from the moratorium on spectrum dues. |
Notably, FY2022 was already under moratorium for spectrum dues, so the net impact for this year is limited to Rs. 14,000 crore. However, the GoI had budgeted for inflows of nearly Rs. 54,000 crore from other communication services for the current year, presumably boosted by the expectation of fresh auction inflows. We now assess the inflows from the telecom sector into the GoI's FY2022 non tax revenues to be limited to Rs. 28,000 crore, trailing the budgeted Rs. 54,000 core, which will modestly widen its fiscal deficit.
Our story with details on the government’s proposals: Govt offers telecom sector a breather (indiatechonline.com)