NEW DELHI: In line with the bold reforms announced for the telecom sector, the government has now written to telcos, including Bharti Airtel, Vodafone Idea and Reliance Jio, asking them to convey by October 29 if they would be opting for four-year dues moratorium, according to sources. It has also given 90-day time to the operators to indicate if they want to opt for converting the interest amount pertaining to the moratorium period into equity. Along with this option, the audited financial statements of the immediately preceding financial year (2020-21) may be submitted, according to a letter seen by PTI. The government has offered the option to defer payment of the spectrum auction instalments due up to four years, with immediate effect, excluding the instalments due for spectrum auction 2021. This option is applicable from FY 2022-23 to FY 2025-26, the letter said. These deferred amounts will be spread equally over the remaining instalments to be paid, without any increase in the existing time period specified for making the instalment payments. Interest as stipulated in the relevant year of auction of spectrum will, however, be charged so that the Net Present Value (NPV) of the payable amount is protected. “The option for moratorium, may be conveyed to this office by October 29,” the letter said. The letters were sent by Department of Telecom on Friday to the individual operators. “Option for converting the interest amount, arising out of protection of NPV on account of deferred spectrum dues, pertaining to the moratorium period, by way of equity, shall be exercised within 90 days of this notification,” it said. DoT’s letter spells out the fine print related to the option for moratorium of deferred spectrum auction instalments and AGR-related dues as also the modalities for converting interest amount into equity. The method of arriving at the price and valuation for equity conversion of interest dues is different for listed and unlisted companies. One of the letters issued to a listed company mentions that equity shares would be issued by the company to the government on a preferential basis. The NPV of the interest amount will be calculated as on the date of exercise of option. The interest amount will continue to be treated as a loan to the company till the completion of the equity infusion process, it said. Recently, the government approved a blockbuster relief package for the telecom sector that includes a four-year break for companies from paying statutory dues, permission to share scarce airwaves, change in the definition of revenue on which levies are paid and 100 per cent foreign investment through the automatic route. The measures, aimed at providing relief to companies such as Vodafone Idea that have to pay thousands of crores in unprovisioned past statutory dues, also include the scrapping of Spectrum Usage Charge (SUC) for airwaves acquired in future spectrum auctions. For the past dues, the government has allowed a moratorium or deferment of up to four years in annual payments. But the telecom companies will have to pay interest during the moratorium period. Also, the government will have an option to convert the due amount pertaining to the deferred payment into equity at the end of the moratorium/deferment period. It has also given an option to the telcos to pay the interest amount arising due to the said deferment of payment by way of equity. Last month, Bharti Airtel chairman Sunil Mittal said the company will opt for payment moratorium offered in the telecom relief package and redirect the cashflow to aggressively build networks. With regard to interest dues on payment moratorium, Mittal had said that Airtel will weigh, when the offer comes from the government, on whether to go for equity conversion mechanism or pay cash. The company’s board will take a decision at that point Mittal had said, adding that with interest component working out to be Rs 7,500-10,000 crore, the stake involved may work out to be 2-3 per cent, in case the company opted for it. The moratorium will free up cash flow to the extent of Rs 40,000 crore and that amount is sufficient to meet the market’s requirements, he had said.