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The new legislation should free up cash flow for India’s telecommunications firms who are struggling to cope with ultra-competitive market conditions
India’s government has provided some much needed relief for its embattled telecoms industry, by extending the payment period for spectrum bought in the country’s telecoms auctions.
India’s government passed the legislation on Wednesday in an attempt to ease pressure on operators, as margin’s in India’s telecoms market continue to be eroded by ultra-high levels of competition.
The deal will not only extend the deadline for final payments, but also allow for the restructuring of existing payment schemes in order to free up cash flow for operators. Under the current agreement for spectrum purchased at auction, operators pay an upfront fee followed by 10 annual instalments. The new legislation would see operators given the option to spread their outstanding payments over a sixteen-year term.
According to a report in The Times of India, the country’s telecoms sector is currently struggling under the weight of approximately £51 billion of debt (4.6 lakh crore Indian Rupees).
Operating margins in the Indian telecoms sector have been driven down by a combination of an overcrowded market place and the emergence of ultra-low-cost data tariffs, such as those provided by Reliance Jio.
