BackTelecom auctions to play key role in non-tax revenue
Telecom auctions to play key role in non-tax revenue
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New Delhi: Non-tax revenue is an important, if unpredictable, element of the government’s efforts to balance its books for 2012-13.
The ₹ 1.7 trillion number (disinvestment proceeds are usually not included in non-tax revenue) is a 32% rise over non-tax revenue in 2011-12 and analysts say it may be difficult to reach this.
The government is expected to auction more than 500 megahertz (MHz) of 2G spectrum in the coming fiscal year after the Supreme Court ordered the cancellation of 122 telecom licences belonging to nine companies.
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Additionally, the department of telecommunications (DoT) is also looking at the auction of more broadband wireless access (BWA) spectrum. This spectrum is being vacated by various central government arms, including the ministry of information and broadcasting, as reported by Mint last week. DoT may also look at auctioning spectrum returned by state-run telecom service provider Bharat Sanchar Nigam Ltd, as reported by Mint in December.
A consultant described the ₹ 40,000 crore the government expects to raise from spectrum sales as “an aggressive target", given the current state of the telecom business in India.
“With banks not lending easily and lesser free cash flows and the regulatory uncertainty that the sector is in, it will be difficult. The question is where is the money," said Prashant Singhal, partner at Ernst and Young. “The additional expense would have to be passed on to the consumer. That is not a good sign for the sector that owes its success thus far to low tariffs."
According to budget documents, the finance ministry expects to raise another ₹ 18,000 crore from telcos. This includes the revenue share that the government gets from telcos and a one-time fee for spectrum above 6.2MHz that many telcos hold.
India’s telecom service providers pay between 2-6% of adjusted gross revenue (AGR) as spectrum usage charge, based on the amount of spectrum held, and between 6-10% of AGR as licence fee.
Budget estimates for 2011-12 had estimated a non-tax revenue of ₹ 29,648.33 crore from the auction of BWA spectrum. DoT could not go ahead with the auction, however.
Analysts also say the government will have to do things differently to raise ₹ 30,000 crore from selling part of its stake in state-owned companies (the budget made it clear that “51% ownership and management control will remain with the government").
The government is under fire over the share sale of Oil and Natural Gas Corp. Ltd (ONGC), where state-run insurance firm Life Insurance Corporation of India emerged virtually the only institutional bidder, picking up 88% of the shares up for sale. As reported by Mint on 12 March, ONGC had initially planned to sell a 5% stake and eventually sold 4.91%.
shauvik.g@livemint.com
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