NEW DELHI :
elcos, struggling with falling revenue amid a hyper-competitive market, have sought a reduction in levies, including licence fees and spectrum usage charges, besides avenues to mobilize cheaper funds to improve infrastructure.
During Monday’s pre-budget consultations with the department of telecommunications, operators also sought the abolition of customs duties for 4G/5G-related network products, and a temporary halt to collection of universal services obligation fund (USOF) fee from telecom companies.
“Telecom companies have raised the issue of a cut in licence fee, and have sought a line of credit in the meeting. We have asked telecom companies to submit their response by tomorrow evening and we will take up these issues with the finance ministry soon," a DoT official said, requesting anonymity.
Telecom operators must pay 3-6% and 8% of their adjusted gross revenue (AGR) as spectrum usage charges and licence fees, respectively, to DoT. Out of the 8% licence fee paid, 5% is USOF levy, which the government uses to improve connectivity and expand network in unconnected areas.
To be sure, the demands are not new, and telcos have for long been saying that the levies in India are among the highest in the world, and need to be lowered.
In fact, in February 2018, the Telecom Regulatory Authority of India, too, had urged the DoT, as part of its Inputs for Formulation of National Telecom Policy - 2018, to review the rates paid by operators, since access spectrum is now being assigned through auctions, and telecommunication networks have become the underlying infrastructure for the growth of the digital economy.
The Cellular Operators Association of India, which represents Reliance Jio Infocomm Ltd, Bharti Airtel Ltd and Vodafone Idea Ltd, has requested a cut in licence fees from 3% to 1% of AGR.
“Out of the ₹96,674 crore collected for the USOF between 2003 and 2019, ₹50,554 crore remained unutilized. While service providers are going rural, they still have to pay the USOF levy. Thus, USOF contribution should be put in abeyance till the entire existing amount of this corpus gets fully disbursed or it should be reduced immediately to 3% (instead of 5%)," COAI said in a presentation to DoT on Monday. Mint has seen a copy of the presentation.
The industry body also requested the government to facilitate funding at a lower rate of interest to finance network upgradation, maintenance and expansion. The Telecom Equipment Manufacturers Association (TEMA) sought the creation of a special working group to look into devising a line of credit system for domestic manufacturers to supply ‘make in India’ equipment. Mint has seen a copy of TEMA’s presentation.
As of March 2018, the telecom sector had a debt of ₹7.7 trillion.
The demands come at a time when two out of the three private telcos have posted record losses, after being hit by an unfavourable court verdict post a 14-year battle between telcos and the DoT on the definition of AGR for the sector.
Bharti Airtel swung to a ₹23,045 crore loss in the September quarter from a profit of ₹118 crore a year ago as it set aside money to pay the dues.
Vodafone Idea’s loss for the September quarter widened to ₹50,922 crore from ₹4,874 crore in the year earlier.
A basic customs duty of 20% is levied on import of most telecom equipment including 4G/5G related network products, soft switches and Voice over Internet Protocol (VoIP) equipment, etc. COAI has sought abolishing these duties to bring down cost of equipment for rollout.