Tuesday, October 4, 2022
Home BUSINESS New telecoms bill may clarify insolvency rules for stressed companies: Report

New telecoms bill may clarify insolvency rules for stressed companies: Report

India’s Telecommunications Bill 2022 is expected to introduce reforms that will ease the treatment of distressed assets insolvency and mergers and acquisitions (M&A). According to a BusinessLine (BL) report, it will also allow the hub to waive fees from stressed telcos.

Under current Insolvency and Bankruptcy Code (IBC) rules, it is unclear whether the spectrum owned by defaulting telecoms operators belongs to the government or to the banks.

With the new bill, according to BL, the ownership of said spectrum will pass to the government. The Department of Telecommunications (DoT) had previously stated that spectrum is a public resource and should go to the center.

Under the new rules, the telecoms operator will retain the spectrum until it continues to pay fees and provide services. Once the service ends, ownership of the spectrum will pass to the government.

In addition, the bill is also expected to introduce a framework to deal with financial strains on telcos. It will give the center the power to convert fees into shares, defer or even cancel fees to maintain competition.

So, the bill will also make changes to the rules of mergers and acquisitions of telecommunications companies. According to the Business Line report, after the bill is passed, telcos will not be required to obtain prior permission for such deals, only a notice period will be required.

The Telecommunications Regulatory Authority of India (TRai) also wants to be structured to work independently and will be accountable only to Parliament. Currently, you also have to report to the Department of Transportation.

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