Airtel, Jio and Vodafone Idea seek financial relief from Indian government

financial relief
Photo by Andrii Yalanskyi

India’s private telecom operators – Vodafone Idea, Bharti Airtel and Reliance Jio – have dialed the Ministry of Finance seeking financial relief and measures to lower the impact on Covid-19 pandemic on their respective operations. 

In a letter dated June 26, these telecom operators have urged India’s Finance Minister Nirmala Sitharaman to provide financial relief via soft loans against GST input credits and cut key levies such as license fees and spectrum usage charges (SUC) to improve the liquidity levels of the debt-laden telecoms industry.

“Considering the adverse impact on the economy & operations of the digital communication industry due to Covid-19 pandemic, we again request the Government to provide a refund of the unutilized input tax credit immediately. Else, we request that soft loans at a marginal cost lending rate (MCLR) be given to telecom companies using GST input credits as collateral,” Rajan S. Mathews, Director General of COAI said in the letter.

The Cellular Operators Association of India (COAI) is a representative body of private telecom operators. It also represents telecom gear makers like Ericsson, Nokia, Huawei, and ZTE. 

The letter follows the recent Supreme Court order for Airtel and Vodafone Idea to submit reasonable payment plans, including securities and collaterals, to qualify for staggered payment of AGR dues. 

The COAI also urged the Indian government to rationalize the high burden of the regulatory levies such as Spectrum Usage Charge (SUC) and licence fee on the telecom operators with immediate effect:

“The effective rate of the SUC should be reduced by 3% for all the telecom operators and licence Fee contribution should be immediately brought down from 8% to 3%,” Mathews said in the letter.

The telecom operators through their body also urged the government to exempt the levy of GST on License Fees, Spectrum Usage Charges and Payment of Spectrum acquired in auctions.

They also asked the government to exempt service tax on the amount of LF/SUC payable in compliance with the Supreme Court order.

Telecom operators said that they have invested and will continue to invest significantly in the telecom infrastructure (CAPEX and OPEX). The investment, they said, enabled them to meet the increased demand for telecom services as people continue to work from home, which has increased the load exponentially on their respective networks. 

“…despite the outbreak and spread of the Covid-19 pandemic across the country, telecom companies are playing a critical role in addressing the challenges faced by individuals, corporates, governance services, emergency & utility services etc. Ensuring continuity of these services is of utmost importance in these challenging times,” COAI said in its previous letter.

These companies also told the Finance Ministry there was a severe disruptive impact on the global supply chain, demand and supply elements and on the cash flows of the companies due to the slowing economic activities. 

“This downturn will have an impact on all payments including those of employees, interest, loan repayments, and taxes,” telcos said through COAI in their previous letter to the Finance Ministry.

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