The apex industry association representing the country's major Telecom, Cellular Operators Association of India (COAI) have welcomed the decision by the Telecom Commission, to approve the Inter-Ministerial Committee's recommendations regarding the financial health of the telecom sector.
COAI said that the decision to reduce the interest rate charged, as the penalty for the overdue payments by about 2 percent is also an extremely well-meaning and conducive step. However, not all the decisions taken will have a significant impact on the industry.
The Telecom Commission's decision to increase overall spectrum cap will facilitate M&As in the sector, bringing in significant cost saving and reduction in competition, stabilizing the sector in the long run," said Rajan Mathews, director general of COAI.
The body said that the decisions to increase the overall Spectrum Cap would facilitate mergers and acquisitions in the sector, bringing in significant costs saving and reduction in hyper-competition, stabilizing the sector in the long run.
COAI, further said that the decision to allow 100 percent FDI through the automatic route is a welcome step, considering the fact that the Industry needs substantial investment in the coming years.
While this does give initial cash flow relief, the industry will end up paying more over the life of the debt arising from the lengthened time period of the payments. The additional payment on account of this is expected to be around Rs 80,000 crores. Along with extending the deferred payment schedule, a nominal interest rate should have also been prescribed instead of the existing rates," he added.
The Telecom Commission, the highest telecom policy decision making the body of the government, met on Tuesday 9th January, to deliberate over the recommendations of the IMG, submitted in August last year. The IMG was formed to look into various measures to be taken to improve the deteriorating financial health of the Indian telecom sector, that is currently struggling to manage a cumulative debt estimated, at Rs 4.6 lakh crores, against revenues that have fallen to less than Rs 2 lakh crores.