TELECOM AGR UPDATES

March 11. 2020
The government has received part payment of about Rs 25,900 crore from telecom operators towards statutory dues and has again directed telcos to make full payments

March 9.2020

Niti Aayog CEO Amitabh Kant has come out in support of fixing minimum rates for mobile calls and data, saying there is no other option due to heavy debt of the telecom sector and unsustainable fall in prices.
At present, telecom companies are free to decide on call and data rates but due to stiff competition they have sought regulatory intervention.
Mobile subscribers get access to 4G data at a price as low as Rs 3.5 per GB but if the floor price is fixed as demanded by telecom operators, the mobile internet prices will rise 5-10 times from the current level.
Debt-ridden Vodafone Idea has proposed that the minimum price of data should be fixed at Rs 35 per GB, Bharti Airtel has proposed minimum price of Rs 30 per GB for low data users and Reliance Jio wants it to be priced gradually to Rs 20 per GB.
Kant's stand comes days after Niti Aayog showed discomfort in its official response submitted to telecom regulator Trai on fixing floor price for phone calls and data prices to bail out telecom companies.

Feb 27.2020

Vodafone Idea has demanded fixing minimum tariffs for mobile data at Rs 35 per GB, around 7-8 times of current prices, and for calls at 6 paise per minute along with monthly charges from April 1 to enable it pay statutory dues and make its business sustainable.

Feb 6. 2020

British telecom major Vodafone on Wednesday said it has sought waiver of interest and penalty from statutory dues demand raised by the government from Vodafone Idea, and a time of 10 years to pay only the principal amount with a two-year moratorium.

The Supreme Court in October upheld the demand raised by the government from telecom operators to pay levies on the revenues earned by them.

Vodafone Idea Ltd (VIL), in which Vodafone holds 45.39 per cent stake, is staring at unpaid statutory dues of Rs 53,038 crore, including Rs 24,729 crore of spectrum dues and Rs 28,309 crore in licence fee, and has already warned of shutdown if no relief is given.

Read reiterated that there is no change in the Vodafone position announced in November and the company will not inject any additional capital in the Indian market.

Bharti Infratel and Vodafone India hold 42 per cent stake each in Indus Towers. VIL holds an 11.15 per cent stake in the mobile tower firm which it plans to sell off once the merger is complete.

BUDGET 2020-21 PROVISION FOR BSNL, MTNL, OTHER TELECOM PSUs

Government made provision of allocating Rs 37,640 crore for the state-owned telecom firms BSNL and MTNL crore mainly for 4G spectrum and implementation of voluntary retirement scheme in the budget for the financial year 2020-21.

This means the fund will be issued in the financial year starting April 1, 2020 that was promised for revival of the telecom PSUs.

The government will infuse Rs 14,115 crore in BSNL and Rs 6,295 crore in MTNL for 4G spectrum. Besides, Rs 2,541 crore and Rs 1,133 crore will be provided to BSNL and MTNL, respectively as grant in aid for payment of GST.
MTNL has reported losses in nine of the past 10 years and BSNL too has been ringing in loss since 2010. The total debt on both the companies was at Rs 40,000 crore the third quarter of 2019, of which half of the liability is on MTNL alone.

The capital infusion for 4G spectrum will help the debt-ridden PSUs to compete with private sector players who have rolled out pan-India 4G services.

Both the firms will get Rs 9,889.65 crore cumulatively for ex-gratia payment for voluntarily retiring employees and Rs 3,294.77 crore for implementing voluntary retirement scheme (VRS).

Over 78,300 BSNL employees and 14,378 at MTNL have opted for VRS.

MTNL will also get financial support of Rs 372 crore on account of minimum alternate tax, refund of CDMA spectrum, payment of interest on MTNL Bonds and fiber-to-the-home (FTTH) service.

Besides, state-owned telecom manufacturing unit Indian Telephone Industries Ltd will get fund infusion of Rs 405 crore in the upcoming fiscal year

BSNL MTNL Rs 68,751 crore revival package 2019

The government on October 23, 2019 approved a Rs 68,751-crore revival package for loss-making BSNL and MTNL, including 4G spectrum allocation and voluntary retirement scheme, as well as their merger.
The Union Cabinet also approved merger of the state-owned telecom firms and till the completion of the process, MTNL will operate as a subsidiary of BSNL, Telecom Minister Ravi Shankar Prasad said here while sharing details of the revival package.
The package includes raising of Rs 15,000 crore sovereign bonds to meet the immediate capital requirement of both the companies, 4G spectrum allocation worth Rs 20,140 crore, Rs 29,937 crore for VRS covering 50 per cent of their employees, and Rs 3,674 crore for goods and services tax that will be levied on allocation of radiowaves.
     
BSNL share in sovereign bond is around Rs 8,500 crore and MTNL Rs 6,500 crore

According to the telecom minister Ravi Shankar Prasad the VRS package approved by the Cabinet will give eligible employees 125 per cent of income that they would have earned by serving the company till the age of 60 years

BSNL has around 1.68 lakh employees and MTNL around 22,000.
 "The VRS is voluntary; nobody can be forced to opt for it," Prasad said.
The total debt on both the companies stood at Rs 40,000 crore, of which half of the liability is on MTNL alone which operates in Delhi and Mumbai.
Both the companies have been demanding spectrum to start 4G services to remain competitive in the market.
Telecom Secretary Anshu Prakash said the spectrum will be allocated to both the companies administratively within a month.
"The spectrum allocation to BSNL worth Rs 14,115 crore will be in lieu of equity shares and about Rs 6,295 crore for MTNL in lieu of preferential shares," Prakash said.
The government will monetise MTNL and BSNL assets worth Rs 37,500 crore over a period of three years.
"The assets primarily include land assets but also rental and leasing of their buildings. MTNL has around 29 retail outlets in Delhi alone," Prakash said.
He said BSNL will also need around Rs 10,000 crore to roll out 4G services in phases and MTNL around Rs 1,100 crore.
"The debt on BSNL is the lowest. They can raise capital expenditure required for rolling out network from the banks and bringing in efficiency in their operations," Prakash said.

In the VRS package, the government has approved Rs 17,169 crore as ex-gratia component and Rs 12,768 crore for preponement of pensionary benefit.

"Employees above the age of 53.5 years will get 125 per cent of their salary which they could have earned in balance period of their service," Prakash said.

Employees in the age bracket of 50 to 53.5 years opting for the VRS will get benefit in the range of 80 to 100 per cent of the remuneration to be paid in the balance period of their service.

SPECTRUM AUCTION BACKGROUND

 In order to attract more bidders, the government has reduced base price of CDMA spectrum by 50 per cent; and of GSM spectrum by 30 per cent for second round.
     For Sistema Shyam Teleservices - whose 21 out 22 CDMA licences were cancelled last year by the Supreme Court in the 2G spectrum allocation case - it is mandatory to participate
in the auction for continuing business, although final word on
it is awaited.
     In all, 122 telecom licences were cancelled by the apex court and auctions were held for the radiowaves to be vacated.
     However, in the earlier round in November, there were no bidders for the 800 MHz radiowaves, and only a few for the 900/1800 MHz bands used by GSM operators on account of high
base rates.
     The government has announced the auction of 1800 Mhz and 900 Mhz band simultaneously, and separate auction of 800 Mhz band in 21 of the 22 service area.
     The spectrum being put for auction in 900 Mhz includes:
Delhi- 8 Mhz held by Bharti Airtel and Vodafone each
Mumbai-  8 Mhz each of Loop Mobile and Vodafone
Kolkata- 6.2 Mhz spectrum of Bharti Airtel and 7.8 Mhz of Vodafone,

All these licences are due for renewal in 2014.

In 1800 Mhz, the government will auction 12 blocks of 1.25 Mhz each in Delhi and Mumbai.


REVENUE TARGET FROM SPECTRUM IN DURING FY 2013-14: Rs 40,847 crore.

Will series of proposal revive BSNL and MTNL?

 Government established Mahanagar Telephone Nigam Limited in 1986 by carving out Delhi and Mumbai metro service areas from Department of Telecom with the intent of developing the telecommunication network in the two metros. Presently the government owns 56.25 per cent stake in MTNL.

In 2000, government corporatised the erstwhile Department of Telecom Services and Department of Telecom Operations (DTO) under name of BSNL to provide telecom services in all parts of the country except Delhi and Mumbai.

The telecom sector was opened for private players in 1994 with the issuance of licences for providing Mobile Telephone Services. Initially two private operators were given licence. MTNL was given licence for mobile services in 1997 as third operator in Delhi and Mumbai. Due to litigation challenging the decision to give MTNL licence for mobile services, the PSU could start wireless services in 2001.

BSNL was given licence in 2001. Therefore both the PSUs entered mobile services market in 2001.

With entry to these PSUs, mobile call rates dropped significantly from Rs 16 per minute to Rs 2.80.

STATISTICS

BSNL at present serves around 95 million mobile subscribers and 20 million landline customers. Since MTNL operates only in two circles, it has around 5 million mobile and 3.5 million landline subscribers.

Being part of Department of Telecom, both the PSU had rich infrastructure and deep presence.

BSNL has installed 37564 digital exchanges out of which 28532 are located in rural area. It owns around 7 lakh kilometers of Optical Fibre Cable.

Both the PSU together provide around 80 per cent of wireline connections and 71 per cent of broadband connections in India. BSNL has covered all district headquarters, 99 per cent block headquarters, 68 per cent villages, 91 per cent national highways, 70 per cent state highways, 85 per cent rail routes, 55 per cent of total geographical area of the country.

For broadband services, it has covered almost all district headquarters, 97 per cent blocks, 95 per cent cities and 29 per cent villages.

BSNL provides services in rural and remote areas and in strategically important regions especially North East and Jammu&Kashmir. BSNL is operating 197 stations through satellite connectivity in far flung area of Andman and Nicobar islands and Lakhsdweep islands.

State-run telecom operator BSNL is learnt to have narrowed loss to Rs 8,198 crore in the

financial year 2012-13 which ended March 31, 2013 from Rs

8,850 crore as per unaudited figure. The loss figure does not include amount of around Rs

2,700 crore which the company has to get for supporting rural

landline operations from government.

The company registered loss of Rs 8,850.70 crore during 2011-12 mainly due to regulatory expenses and non-receipt of funds for its rural landlines operations.

This is the first time BSNL has seen an upward trend in its income ever since its  profit started declining continuously from Rs 10,183 crore in 2004—05 before recording

a loss in 2009.

MTNL's is expected to post a loss of around Rs 3,300 crore for financial year 2012-13.

CHALLENGE

Beside commercial side, both the PSUs have social responsibility as well which incurs them loss. The PSUs are required to procure equipments through tender process which results them in lagging behind competitor’s technology.

The PSU are subject to common rules and regulation as private operators. These PSUs are often asked to meet strategic requirement of government like providing telecom connectivity in far flung area of Amarnath during pilgrimage etc.

The challenge before government is to find out way for both the PSUs in a manner that they can be profitable besides fulfilling strategic need of the government.

Proposals

  

Telecom Minister Kapil Sibal in April wrote to Prime Minister Manmohan Singh to set up a Group of Minister .

Following this, government formed GoM to to look into the matter of reviving and revitalizing Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) who have been running in to losses.

    The members of the GoM include Finance Minister P Chidambaram, Telecom Minister Kapil Sibal, Commerce and Industry Minister Anand Sharma, Law Minister Ashwani Kumar, Planning Commission Deputy Chairman Montek Singh Ahluwalia, Information and Broadcasting Minister Manish Tewari and Minister of State in the Prime Minister's Office V Narayanasamy.

The GoM has to be notified again following resignation of Kumar. Changes were under process when this report was being written.

Department of Telecom is learnt to have listed various proposals for revival of these PSUs including their venturing in to cable and broadcasting services.

DoT may seek GoM's nod for "Exploring new business opportunity being created by convergence of services and networks across telecommunications

(value added services and internet telephony), information, cable TV and broadcasting media services." By both the PSUs.

 

Among host of measures, DoT is likely to ask GoM to provide financial support of BSNL and MTNL for retaining airwaves beyond the initial quantity that was

allocated to them for mobile and other wireless services.

     Government has decided to charge one-time spectrum fee for airwaves held by operators beyond initial allocations that was made to start mobile services.

     One-time fee for BSNL's GSM spectrum amounts to around Rs 6,912 crore and MTNL Rs 3,205 crore.

BSNL and MTNL's proposal to surrender wireless broadband spectrum is likely to be discussed at the GoM meet. BSNL and MTNL were asked to pay amount of Rs 8,313.8 crore and Rs 4,533.97 crore on June 20, 2010 for the airwaves that are being currently used to provide 4G services.

     

The proposal include GoM's nod for implementing voluntary retirement scheme in both the PSU's for 1 lakh BSNL employees and 20,000 employees in MTNL.

The salary and pension expenses of overall MTNL employees form 103 per cent of company's revenue and for BSNL it is 49 per cent.

     

DoT will also seek GoM's nod to discharge pension liabilities by paying lumpsum amoount of around Rs 5,925 crore.

The Department  will ask GoM to consider providing preferential treatment to both the state-run telecom firms in telecom services used by government departments and other public sector units.

END.

DoT writes to Trai on spectrum pricing issue

New Delhi, Oct 10 (PTI) The Telecom Ministry has sought clarifications on various points made by regulator Trai on 'Spectrum Management and Licensing Framework' which will form the basis for spectrum allocation.

DoT has found variations in the points made by Trai during course of its  communication with the regulator on the issue of charging 'current price' for spectrum allocated to telecom operators.

Trai on February 8, 2011 recommended April 1, 2010 as applicable date for charging the current price for spetrum allocated to GSM players in 1800 Mhz frequency band and CDMA players in 800 Mhz and 900 Mhz (GSM) frequency band.

Later on May 3, Trai said the current price may be charged from the date of allocation in 2008-09, but subject to the outcome of various court cases.

The concept of current price was recommended by Trai to determine valuation of spectrum in the frequency band where auction can be done to determine price of spectrum.

The current price is to charged for excess spectrum allocated to telecom operators beyond prescribed limit, which in case of GSM players is 6.2 Mhz and 5 Mhz in case of CDMA players.

The Telecom Regulatory Authority of India (Trai) has said that no current price is to be charged from the existing operators for assigning spectrum up to 6.2Mhz in 1800 Mhz band and up to 5 Mhz for CDMA during the validity of existing licences held by them.

Trai has recommended that under new policy regime after renewal of licence, spectrum allocated beyond the prescribed limit of 6.2 Mhz for GSM players and 5 Mhz for CDMA players should be withdrawn. But DoT is not clear on the rationale for defining prescribed limit.

"...TRAI may indicate the rationale for defining the prescribed limit of spectrum," DoT said in a letter written to Trai.

The Telecom Department has also found a contradictory view in case of mergers and acquisition guidelines.

DoT is confused over lock-in period for dilution of equity by a telecom service provider.

Trai at one place has suggested removal of lock-in period of three years but at the same time has placed restriction in dilution of equity to a period of five years whcih DoT says is not in sync with objective of enabling mergers and acquisition policy regime.

"It appears that the objective of the recommendations given under Chapter IV (recommendation on consolidation of spectrum) is to have an enabling M&A policy regime. But this recommendation appears to be contrary to this objective," DoT said.

DoT has asked Trai to review and reconsider these recommendations.

Source: PTI

DoT fines Airtel Rs 50 crore for masking calls

The telecom department is likely to haul up Bharti Airtel for allegedly camouflaging its calling-line identification (CLI) mechanism while making promotional business calls to non-Airtel customers. So much so, it plans to slap a Rs 50-crore penalty on the company since tinkering with the CLI mechanism tantamouts to a breach of licence conditions, an official with direct knowledge of the matter told ET. 

In an internal note reviewed by ET, the department claims it has received complaints about "Bharti Airtel camouflaging its CLI mechanism in Madhya Pradesh circle for making business promotion calls to non-Airtel mobile customers". 

Investigations are underway to detect similar violations in other circles. Under Clause 41.19 (iv) of universal service access licence norms, a mobile operator cannot tamper with its CLI mechanism since this is required for security purposes, and any violation amounts to a security breach. 


SOURCE : ECONOMIC TIMES