Let telcos undergoing debt restructuring surrender spectrum: IBA to DoT

Published On: 06, Dec 2017 | Source: business-standard.com

As the telecom sector continues to experience severe stress, the Indian Banks' Association (IBA) has sought to allow undergoing restructuring as part of the Reserve Bank of India's (RBI) schemes to surrender liberalised and refund any excess upfront payment associated with such

In a letter dated November 29, addressed to Department of Telecommunications (DoT) Secretary Aruna Sundararajan, the IBA has also requested to expedite the process for announcing various relief measures for the as it is becoming difficult for them to survive and service without immediate support of the government.

The total liabilities of the amount to Rs 775,000 crore as on March 2017, of which bank borrowings and liabilities towards payment to DoT amount to Rs 580,000 crore.

Some of the are undergoing financial restructuring under various schemes. As part of the restructuring, the have proposed to optimise their assets and monetise non-core assets, including their existing portfolio of to reduce and improve balance sheets.

Currently, tripartite agreements have been signed between banks, DoT and the with banks getting the charge of either through assignment of licences or by negative lien.

"The government is requested to allow the who are undergoing restructuring to surrender the liberalised/auction acquired spectrum," the letter said.

IBA said as most of the operators undergoing restructuring have borrowed from public sector banks, the government has been requested to refund any excess upfront payment made during the purchase of and cancel all future deferred payment liabilities associated with such

"This money will be used for repaying the banks, which in turn prevent loans from turning into NPA. We understand that the government had allowed a similar facility to and in the past," the letter added.

The IBA has also requested to return bank guarantees submitted by the to the DoT in respect of such to the operators without being enchased as it will help free up the critical working capital lines for these operators.

The telecom sector continues to face severe financial stress on account of falling revenues and EBITDA margins of almost every operator. The has seen a decline in revenues and operating profit in FY 2016-17 for the first time.

The adjusted gross revenue (AGR) of the declined to Rs 39,777.55 crore in Q1 of FY18 from Rs 53,383.55 crore in Q1 of FY17.

The financial crisis forced the telecom sector to approach the government for policy support to overcome the current situation as the reduced revenues are not sufficient to meet the existing obligations and deferred payment commitment for

(RCom) and have already defaulted on their repayment obligations.

The inter-ministerial group (IMG) formed to address the financial stress in the sector has already recommended relief measures for the industry, which have also been approved by the Telecom Commission, which is the highest decision-making body of DoT. The proposals will go to the Cabinet for final approval.

As per the relief measures, the government will increase the timeframe for deferred payments to 16 years from the current 10 years, as well as a change in the calculation of interest for delayed payments.