COAI writes to DoT for floor price on tariffs from April

 Mobile operators association, COAI, has suggested steps to facilitate reduction of financial stress on the industry in wake of the AGR payments where it has sought floor price for telecom tariffs be introduced from April this year.

TRAI has now initiated a consultation process on floor pricing. "Our proposal is that a floor price needs to be made effective immediately (say from 1st April, 2020)," COAI Director general Rajan Mathews said in a letter to DoT Secretary Anshu Prakash.

For AGR related payments COAI seeks reimbursement of credit due to telcos from the government through adjustments can help companies meet AGR payment.

"Government needs to allow set-off of GST credits lying with the government. Further, after the GST set-off, the payment of balance amount of interest, penalty, and interest on penalty be allowed in a staggered manner. It is requested that a moratorium of 3 years be provided, as we expect that it will take at least that much time to recover the health of the sector, followed by a payment tenure of 15 years at a simple interest of 6 per cent," the letter said.

The amounts payable under the Supreme Court judgement, after mutual discussion maybe frozen to avoid recurring claim of interest, penalty and interest on penalty.

In the alternative, the government may consider granting loan equal to the AGR amount at 6 per cent rate of interest (as being reported in media) so that the AGR liability maybe discharged immediately. The other proposals are reducing License fee from 8 per cent to 3 per cent and existing Spectrum Usage chargs to 3 per cent and 0.5-1 per cent for forthcoming auctions for recovering only the administrative cost. Financial Bank Guarantees should at least be reduced to one quarters License Fee, COAI said.

The telecom Industry has invested over Rs 10.44 lakh crore in setting up world class mobile networks over the last 20 years and has committed around Rs 3.68 lakh crore in spectrum through auctions since 2010.

However, the revenues and profitability have declined significantly. The debt burden is well over Rs 7 lakh crore, and there is still significant investment required in the future, it said.IANS