The Union Cabinet has approved certain reforms for the telecom sector. It includes nine structural reforms and five process reforms, mainly intended to help the three private telecom companies.

Vodafone Idea, one among the three major private telecom companies, is in the verge of a collapse. It must be understood that, the telecom reforms have been announced urgently, only to  salvage Vodafone Idea.

All the three private telecom companies are badly hit by the judgement delivered by the Supreme Court of India last year. There was a long standing dispute between the government and the private telecom companies, as to whether the ‘non-telecom revenues’ should be included for calculating the payment of License Fee and Spectrum Usage Charge. The Supreme Court delivered the judgement in favour of the government. As a result of this, all the three private telecom companies have been compelled to pay an amount of Rs.1.31 lakh crores. The Supreme Court has ordered that this amount should be paid over a period of ten years.

However, through the decision taken in the Cabinet, the government has deferred the aforementioned payment, for a period of four years. Even after the expiry of four years, the private companies need not compulsorily pay the amount. This is because, as per the decision of the Cabinet, the government can convert this outstanding amount into equity.  The government companies of BSNL and MTNL are not benefited by this decision.  

As a result of this decision, hereafter, the telecom companies need not pay License Fee or Spectrum Usage Charge for their Non-Telecom Revenues. However, this decision will benefit BSNL and MTNL only in a very small way, since their Non-Telecom Revenues are negligible.

Until now, the spectrum allotted to the telecom companies through auctioning, is for a period of 20 years. Hereafter, this tenure will be for 30 years. Again, this will only help the private telecom companies, because the spectrum being allotted to BSNL and MTNL  are for free.

Further, until now, only 49% FDI has been allowed under the Automatic Route. Any amount of FDI, beyond this limit, had to go through the Government Route. But, now, the Union Cabinet has decided to allow 100% FDI, under the automatic route. This decision of the government is detrimental to the security of the nation, since, this has opened the doors for the multinational companies to completely take over the Indian private telecom companies.

 The government is already trying it’s best to kill BSNL and MTNL. In case BSNL and MTNL are closed down in future, then the entire telecom operations will go into the hands of foreign companies. Telecom sector is considered to be the second line of defence. Hence, the decision of the government to allow 100% FDI under the Automatic Route is detrimental to the safety and security of the nation.

Above all, the so-called telecom reforms approved by the Union Cabinet, do not have much to offer to the ailing BSNL and MTNL. BSNL is already crippled because, the government is not allowing BSNL to procure 4G equipments. Private companies are procuring their equipments from global vendors. However, BSNL has been mandated to procure it’s 4G equipments only from domestic vendors. No Indian company is having proven 4G technology. Thus, the government has wantonly created road-blocks in the launching of 4G services by BSNL. Further, the government has to pay outstanding dues to BSNL, to the extent of Rs.39,000 crore. Timely repayment of this amount by the government will enable BSNL to invest in the expansion of it’s networks. However, it is regrettable that, the Union Cabinet has not taken any decision to allow BSNL to come out of it’s crisis. 

( Courtesy: BSNLEU Website)