Telecom Relief Package: DoT, FinMin at Advanced Stage Discussions

Sources report that while the details have not been ironed out yet, talks between DoT and the Finance Ministry are at an advanced stage regarding the telecom relief package.

No Precedent a Worry for Telecom Relief Package

For Vodafone Idea, timing of the relief package will prove vital; the telco already is walking a tight rope. The relief package was widely expected to be released last week, at the cabinet meeting. However, it seems that the FM and the DoT are being cautious.

The government has never stepped in to save a private company before. The telecom package will help Vodafone Idea the best, and that will make the task all the more difficult. Since the Center has never saved a company from going down, there is no precedent for any of the relief points being discussed. For instance, no precedent exists for reducing the spectrum usage charge, or giving a moratorium on AGR dues.

Therefore, giving a tax set off, as a support to the industry, remains the only viable option that the Cabinet can approve of. That will not help anyone in any significant way.

India needs Vodafone Idea; without a third telco to introduce checks and balances, the country can't achieve the scale of digital transformation it targets. The government has already ruled out merging Vodafone Idea with the two PSUs, BSNL and MTNL.

The fact that the communications minister took charge two months ago, and that the current DoT Secretary will resign at the end of September complicates things. Talks have happened on appointing an OSD in DoT now so that the incoming secretary has the "feel of things". The government, if it approves the telecom relief package, will have to conduct a long exercise with Vodafone Idea. Therefore, a change in leadership needs careful handling.

The Center does not want another BSNL or MTNL at their hands, two of which depend entirely on budgetary allocations. Therefore, it remains hesitant to go with a sector relief package.