The Centre has decided to reconsider its stand on the levy of a one-time spectrum fee on telecom operators.

The Modi government has sought three weeks’ time from the Supreme Court to decide whether or not to challenge a judgment handed down by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in 2019 which had rejected its claim to Rs 40,000 crore from telecom operators linked to the spectrum levy.

Solicitor-General Tushar Mehta informed an apex court bench comprising Justices M.R. Shah and A.S. Bopanna that the government wished to reconsider its stand on the spectrum fee in “public interest” and to mitigate the financial distress in the telecom industry.

The one-time spectrum fee was imposed in 2012 and was supposed to be levied on telecom operators holding more than 6.2 Mhz of spectrum in a single circle between July 2008 and 2013. The unpaid dues as a result of the fee have ballooned to Rs 40,000 crore.

The TDSAT had ruled that the spectrum fee could be levied only from 2013 and would have no retrospective application as contemplated by the government.

If the government decides to drop its appeal against the TDSAT order, it would signal a major relief to the beleaguered telecom sector.

Analysts suggest that Bharti Airtel and Vodafone would get a financial relief of Rs 8,414 crore and Rs 4,390 crore, respectively, if the government drops its appeal. It will also provide a major reprieve to companies like Reliance Communications which no longer provides services.

Last month, telecom operators were granted a four-year moratorium from paying dues arising from a mix of telecom fees and spectrum levies that have swelled to over Rs 1.47 lakh crore. The government had also offered them an option to convert a part of the debt into equity.

The apex court has adjourned the matter till November 17.

K. Raja Raman, secretary in the Department of Telecommunications (DoT), had filed an affidavit on Monday which came up on Tuesday before the bench headed by Justice M.R. Shah.

The affidavit said the Union cabinet had announced a number of decisions on September 15 to head off a situation where the viability of some telecom service providers became unsustainable “resulting in a monopolistic situation” in the industry.

The affidavit was referring to Vodafone Idea without actually naming it. The struggling telecom operator had informed the government that it was on the brink of collapse and unable to pay dues worth over Rs 50,000 crore unless it was granted a moratorium.

The package of reforms was announced last month because the government was aware that the collapse of Vodafone Idea would blow up into a crisis in the banking industry as well.

In its affidavit, the DoT said the Indian Banks Association had also informed the government that adverse developments in telecom sector could lead to "vanishing competition, duopoly, unsustainable operations and severe loss for the banking system which has a huge exposure to this sector."

It added that the government wanted to reconsider its "decision to proceed with the present proceedings of appeals."

However, it asked for time to review the position as decisions will have to be taken after the scrutiny at various levels".