Lok Sabha Question No. 867 (UNSTARRED), answered on 2018-02-07
Subject: Termination Charges
Ministry: COMMUNICATIONS
Asked by: HARI BABU KAMBHAMPATI, K. GOPAL

## GOVERNMENT OF INDIA MINISTRY OF COMMUNICATIONS DEPARTMENT OF TELECOMMUNICATIONS

## LOK  SABHA UNSTARRED QUESTION NO. 867

## TO BE ANSWERED ON 7 TH  FEBRUARY, 2018

## TERMINATION CHARGES

867.   DR. KAMBHAMPATI HARIBABU:

DR. K. GOPAL:

Will the Minister of COMMUNICATIONS be pleased to state:

- (a) the average termination charges paid by the Telecom Service Providers (TSPs) to the foreign operators;
- (b) whether the TSPs have demanded any change in the said termination charges and if so, the details thereof and the reaction of the Government thereto;
- (c) whether  the  country's  telecom  industry  is  reeling  under  severe  financial  stress and has been seeking relief from the Government; and
- (d) if so, the details thereof and the steps taken by the Government in this regard?

## ANSWER

## THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS & MINISTER OF STATE IN THE MINISTRY OF RAILWAYS (SHRI MANOJ SINHA)

(a) & (b) In  order  to  review  Interconnection  Usage  Charges,  TRAI  had  issued  a Consultation Paper (CP) on 'Review of Interconnection Usage Charges' on 05.08.2016 wherein, inter-alia, issues related to 'International Termination Charges' were raised for consultation with stakeholders. The  Authority  has  conducted  an  Open  House Discussion  (OHD)  on  20.07.2017  in  New  Delhi,  which  was  attended  by  many stakeholders. In order to give more  deliberation  on  the  issue  of International Termination charges, the Authority conducted a Workshop on 'Review of International Termination  Charges'  on  16.10.2017  in  New  Delhi.    The Workshop  was  attended  by International Long Distance Operators (ILDOs) who carry voice traffic to/from India and Access Service Providers.

In  the  consultation  process,  based on the information on outgoing ILD minutes for the Quarter ending September, 2017 received from ILDOs, the Authority computed the  global  average  of  the  International  Settlement  Charges  (ISC)  payable  by  Indian ILDOs to foreign carrier as Rs.2.57 per minute.

2. The Termination charges paid by TSPs to the foreign operators is not regulated by TRAI.    These  charges  depend  upon  the  termination  charges  etc.  in  the  foreign country.

Contd………2/-

(c) & (d) Committee of Secretaries (CoS) had discussed the issue relating to stress in balance sheet in select sectors in its meeting held on 29 th  March 2017. Consequently, an Inter-Ministerial Group (IMG) was constituted on 16/05/2017 with following terms of reference:

-  To examine systemic issues affecting viability and repayment capacity in telecom sector and furnish recommendations for resolution of stressed assets,
-  Policy reforms and strategic interventions for Telecom sector.

The IMG held eight meetings and also held consultations with all the major TSPs and the Banks. Based on these and other sectoral data IMG analyzed the nature and extent of financial stress in the telecom sector and made a set of recommendations.

The IMG noted that the financial stress for some TSP's has been caused because of low operating cash flows over a number of years, inadequate equity infusion and debt which  does  not  appear  sustainable.  The  sector  is  in  the  midst  of  consolidation.  The competitive context of the industry has led to accumulation of debt, a decline in EBIDTA and  requirement  of  periodic  infusion  of  additional  equity.  In  view  of  this,  the  primary solution to  the  current  problems  in  the  sector  will  come  internally  from  the  TSPs  and they  remain  liable  to  service  the  debt  taken  by  them.  Any  proposed  government intervention needs to be carefully calibrated to ensure that the short term pain points are somewhat eased giving the sector time to rework its investment and business strategy. The major recommendations of IMG are as follows:

- a)  Replacement of the current provision of PLR+2% by MCLR+4% as the interest rate on delayed payment of LF & SUC -One year MCLR of SBI may be adopted with effect from the date of its introduction by RBI i.e. April 01, 2016 in place of PLR.
- b)  Amendments  to  Spectrum  Trading  Guidelines  -  DoT  may  issue  appropriate clarification  that  only  the  gain  or  profit  arising  from  trade  of  spectrum  shall constitute as part of revenue for the purpose of calculation of AGR. The matter has been referred for legal opinion, and would need further approval by Cabinet.

Deferred Payment Liability of TSPs on Spectrum - TSPs may be given a one- time opportunity  to  opt  for  higher  number  of  instalments  (16)  instead  of  the  currently permitted 10 instalments. The matter needs further approval by Cabinet Spectrum Auction  and  Reserve  Price  of  Spectrum  -  (a)  The  approach  to  fixing  the  reserve price  for  spectrum  may  be  reviewed  for  optimization  in  line  with  international  best practices. (b)The next Spectrum auction may be conducted at a time as considered appropriate  by  the  Government.  (c)The  exercise  of  Harmonization  of  spectrum  in 2300Mhz and other bands may be taken up on priority.

- c)  Spectrum Cap Holding - DoT may consider the issue in consultation with TRAI.
- d)  Mortgage  of  Spectrum  -  (a)  TPA  may  be  reviewed  to  be  in  line  with  IBC  in consultation with DFS. (b) Extend the new TPA guidelines all access licenses
- e) Long Term Loans to the Telecom Sector  - The banks may take a commercial decision to take advantage of the 5/25 scheme for the telecom sector.

Report  of  IMG  has  been  approved  by  the  Telecom  Commission,  and  action  for obtaining  necessary  approvals  is  underway,  including  consultations  with  TRAI  and other Govt. departments.

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