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New telecom Bill to ease stressed assets resolution

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The proposed Indian Telecommunication Bill 2022 will usher in a slew of reforms including a separate set of rules to deal with insolvency for stressed telecom assets, easier merger and acquisition norms, and empowering the Centre to waive off dues of financially stressed operators.

According to top officials, the new Bill will put spectrum ownership in the hands of the government in case of a telecom operator goes through bankruptcy. This is being done to remove all ambiguity under the existing rules under the Insolvency and Bankruptcy Code.

Insolvency cases under IBC have not had much success because there was no clarity on whether the spectrum owned by the defaulting operator belongs to the Centre or whether banks can take control. DoT has been of the opinion that being a public resource, the ownership of spectrum is with the Government and therefore it cannot be sold by the banks under the insolvency process. Under the new framework, the ailing operator will continue to own the license and spectrum as long as it continues to provide services and government dues are paid. Furthermore, the spectrum will be returned to the government if the services by the operator stops.

 

The Indian Telecommunication Bill, set to be introduced in parliament soon, is set to consolidate three separate acts which presently govern the telecommunications sector — Indian Telegraph Act 1885, Indian Wireless Telegraphy Act 1933, and The Telegraph Wires, (Unlawful Protection) Act 1950. 

Moreover, the government also plans to introduce a framework to deal with financially stressed telecom operators. Deliberation on these provisos comes at a time when ailing operator Vodafone Idea fails to make a dent on their overall debt of ₹2-lakh-crore, of which nearly 75 per cent of the debt is owed to the Centre.

The proposed Bill is likely to have a clause that will grant the Centre powers to defer, convert into equity, write off or grant relief to any licensee under extraordinary circumstances, including financial stress, consumer interest, maintaining competition, said a top official.

DoT is also aiming to simplify the M&A procedure in this sector, which is governed by various guidelines, leading to inordinate delays and lengthy court proceedings. The proposed change as part of the bill is that no prior permission, only a prior notice period will be required- “paving way for easier restructuring and mergers.”

TRAI under new framework

The powers of the TRAI may also change as part of the new telecom bill.  Provisos covering referencing and back referencing between TRAI and the DoT will be omitted as part of the new bill. Moreover, the TRAI act will be in consonance with the Indian Telecommunications Act. Explaining the changes a senior executive noted, “TRAI as a body is being structured to work independently and responsible only to the parliament. This is being done to prevent conflict of interest between the regulator and the licensor.”

Published on

September 20, 2022



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