Budget 2024: Centre expects ₹1.2 trillion revenue from telecom sector in FY25

  • The ongoing financial year marked a steep rise in revenue from the communications sector

Shouvik Das
First Published1 Feb 2024
The revenue projection for the sector comes at a time when telecom operators had called for relief from a number of duties. (Photo: Mint)
The revenue projection for the sector comes at a time when telecom operators had called for relief from a number of duties. (Photo: Mint)

The Government aims to collect a revenue of 1.2 trillion from the telecom sector in FY25, it said in the interim budget presented in parliament on Thursday.

This is about 30% higher than its revised revenue target of 935.4 billion from the sector for FY24.

The ongoing financial year marked a steep rise in revenue from the communications sector, which includes revenue from telecom operators’ adjusted gross revenue (AGR) dues, spectrum licensing, among others. As against a revenue of 64,8.35 billion in FY23, the government’s projected inflow for FY24 is 44% higher year-on-year (y-o-y).

The revenue projection for the sector comes at a time when telecom operators had called for relief from a number of duties, including Universal Service Obligation Fund (USOF) dues, and a reduction in licence fees. Other demands included a longer moratorium on the period for offsetting business losses, and reducing custom duty on imports of telecom equipment.

FY25 is also expected to be a significant year for the telecom sector, where three private sector operators—Bharti Airtel, Reliance Jio Infocomm and Vodafone-Idea—have a combined market share of over 92%, per data from the Telecom Regulatory Authority of India (Trai) as of 29 January. Alongside the existing businesses, telcos in the country expect an influx of demand from enterprises for industrial 5G and internet of things (IoT) services. The advent and potential commencement of satellite-based communications services are also expected to start this year, once satellite spectrum allocation is completed by the government.

Industry observers, however, said that the overall expected revenue is higher than anticipated. Ankit Jain, vice-president and sector head, corporate ratings, at Icra Ltd, said, “The government’s expected revenue inflow for FY24 itself was higher than our expectations—telecom payments collated together, not counting advance payments by telcos, amount to around 55,000 crore ( 550 billion). Some of the FY24 revenue is likely to be accounted for by the spectrum auction that took place last fiscal, but even then, a 30% jump in the upcoming financial year could only be explained by a fresh round of spectrum auction that the government may hold.”

Jain added that factors such as enterprise 5G or satcom will not be major contributors. “Satcom services will be done through administrative allocation, so the revenue inflow from that will not be as massive as a spectrum auction. Demand for enterprise 5G and IoT services for telcos, which could generate higher inflow for the Centre, is also tepid—this does not explain the additional 27,000 crore ( 270 billion) that the government expects to earn this year (FY25),” he said.

A significant increase in revenue from the telecom sector could come in FY26, since moratorium on a round of spectrum acquisition payments for telecom operators is scheduled to end in September 2025. “Prepayments from telecom operators could add up to 10,000 crore ( 100 billion) this fiscal, but a lot of it will get reduced due to certain pre-payments that have already been made in this financial year.

The telecom sector, meanwhile, continues to push for reduction of duties. SP Kochhar, director-general of industry body Cellular Operators Association of India (COAI)—which counts all the three telcos as its core members, said that in the full budget to be presented after the general elections, the industry hopes for “reduction of regulatory levies like license fee, deferring USOF contribution till the existing funds are exhausted, exemption of basic customs duty (BCD) on telecom equipment, waiving of GST on regulatory payments and refund of ITC (input tax credit), among others.”

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