Telecom firms approach Trai, seek long-term policy for spectrum auctions and cut in levies
New Delhi: Telecom operators have made a pitch for a reduction in levies payable to the government and a long-term policy for spectrum auctions, Telecom Regulatory Authority of India (Trai) chairman R.S. Sharma said.
The regulator met top officials of telecom service providers (TSPs) on Tuesday to outline issues to be taken up with Trai in the course of 2018.
“TSPs raised the issue of multiplicity of levies which they have to pay... they said GST... whether there could be some rationalisation in this particular aspect or not,” Sharma said, adding that the regulator has sought more inputs after which it will decide whether or not to issue a consultation paper.
Telecom operators pay around 3-5% and 8% of their adjusted gross revenue as spectrum usage charges and licence fees, respectively, to the government. Telecom services also attract 18% GST.
In a written reply to the Lok Sabha in November, telecom minister Manoj Sinha said that the department of telecommunications has suggested to the finance ministry that GST on telecom services be lowered to 12%.
The recommendation was made as part of the annual budget exercise and the matter is with the finance ministry’s department of revenue for necessary action, Sinha had said. A decision to change the tax rate has to be approved by the GST Council, the federal body that decides on all indirect tax matters.
Trai has in the past recommended that the telecom department cut licence fees and spectrum usage charges, given the debt burden on telecom operators. The regulator has also favoured a reduction in GST rate.
According to estimates by the Indian Banks Association, the total liabilities of the telecom sector stood at Rs7.75 trillion as on 31 March, of which bank borrowings and liabilities towards spectrum payment to the telecom department stood at Rs5.8 trillion.
The sector is in the midst of a tariff war started by new entrant Reliance Jio Infocomm Ltd, which offered services free for almost seven months and later announced rock-bottom tariffs in April. This led to pressure on revenue streams of other operators who were forced to match tariffs.
The government is working on a new telecom policy that will review the current licensing regime, among other issues. The government aims to introduce the policy before the end of the current financial year.
“The new telecom policy discussion took place quite extensively. Everybody was of the view that we need to position the new telecom policy as one which should position the sector as an enabler for the entire economy. That should be the broad focus of the new telecom policy,” Sharma said on Tuesday.
Operators also favoured a long-term spectrum policy with a definite timeline for auction of airwaves.
Infrastructure issues related to setting up of telecom towers, including right-of-way, were also discussed, a person present in the meeting with telecom operators said on condition of anonymity.
“Telecom is an enabler for 5G, Internet of Things, agriculture, education, smart cities, transport, etc. It is an enabling infrastructure which should be treated with that importance and therefore whatever the issues are relating to infrastructure we need to have a consultation on them,” Sharma said.
The regulator aims to provide inputs on the new telecom policy to the government in the next few weeks, Sharma said.