NewsGate Press Network

N N Kaul

The stage is all set for the third relief package for the ailing telecom sector which is likely to be announced later this month.

Relief packages introduced earlier have failed to revive investor interest in the sector and as of today Vodafone-Idea and BSNL are still crying for support to survive.

All indications point out to a new relief package that is most likely to include a revised spectrum auction policy and will lay the foundation for the revival of growth of the telecom sector. Experts say that if that happens it will be a complete U-turn from the existing telecom policy.

Reliable sources indicate that the proposed changes would once again turn the Indian telecom sector into a favorite investment destination.

Policy change proposes to shift the auction model to a revenue sharing model from the present system of spectrum auction. 

As per the proposed changes, telecom service providers would not be required to pay price for the spectrum acquired but instead would pay a committed portion of revenue generated to the government.

The players in the sector would be bidding for the  percentage of revenue that they would be sharing with the government in lieu of the spectrum that they are using.

Experts believe that government’s share in the revenue from the service (which is more than 30%) is one of the causes for sickness of this sector.

According to sources the new proposal has already been cleared by the department of telecom and while awaiting a final go ahead from the ministry of finance.

As  per sources  this proposal would be a game changer as  there would be no  accumulation of debt that has been the root cause of sickness in the telecom sector.

The present system of  spectrum auction was  introduced following the supreme court verdict.

According to telecom experts, the sector today is  ailing  with an accumulated debt of over Rs 8 lakh crores.

At present, despite growing  sickness the gross revenue of the sector is estimated to be around  $37 billion per year. With an advertisement growth rate pitched at 11%  between 2020-23, it will once again attract foreign investments.

Indications of impending changes were reflected in the government  looking for out of court settlement of  a number of cases  against telecom operators.

Even during the  worst period of the pandemic,  this sector received foreign direct investment of  $37.66 billion.

(N N Kaul is a Delhi based freelance journalist and a former senior Press Information Bureau officer)