This is what the telecom package means: 5 points

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The back-up plan will bring relief to Reliance Jio, Bhari Airtel and especially Vodafone Idea.

The center authorized a back-up plan for the ailing telecommunications sector, with the aim of relieving companies weighed down by huge AGR contributions. The package would offer flexibility to carriers on the payment of their long-standing unpaid dues, including a four-year moratorium on the spectrum payout that is due in April 2022 and the removal of spectrum fees. Telecommunications companies may also have the option of converting interest on their spectrum fees amounting to a four-year moratorium into equity.

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The relief package will bring relief to India’s three major mobile operators namely Reliance Jio, Bhari Airtel and most importantly Vodafone Idea.

Vodafone Idea, which was created from the merger of the Indian unit of British telecommunications giant Vodafone and Birla’s Idea Cellular, owes Rs 50,399.63 crore in statutory contributions to the government.

The telecommunications sector was shaken by the entry of Jio at the end of 2016 with free voice and data plans at reduced prices. .

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The industry was also hit by a Supreme Court ruling last year, which forced Bharti Airtel and Vodafone Idea to pay their overdue contributions to the government.

Kumar Mangalam Birla, former chairman of Vodafone Idea, had in fact written a letter to the cabinet secretary offering his stake in Vodafone Idea free of charge to the government or to any company approved by the government. On August 4, Mr. Birla resigned his post as Chairman of Vodafone Idea.

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Earlier this week, banks run by the State Bank of India called on the government to give Vodafone Idea more time to pay its taxes.

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