Centre targets 30% higher revenue from telcos in FY25

New Delhi: he Centre aims to collect a revenue of ₹1.2 trillion from the telecom sector in FY25, it said in the interim budget on Thursday. This is about 30% higher than its revised revenue target of ₹93,541 crore from the sector for FY24. The markup in question is likely to be fuelled by an upcoming spectrum auction, as well as increased adjusted gross revenue (AGR) payouts from telcos in FY25.

The current fiscal marked a steep rise in revenue from the sector, which includes revenue from AGR dues, spectrum licensing, etc. Against a revenue of ₹64,835 crore in FY23, the government’s projected inflow for FY24 is 44% higher year-on-year (y-o-y).

“The telecom sector today is robust, and its growth and expansion of networks is visible to all of us. The usage of data has increased, and even though India has the most affordable telecom sector globally, the overall revenue that the government will earn from them, which is a fraction of what the telcos earn, will increase,” union electronics and IT minister Ashwini Vaishnaw said at a post-Budget press conference on Thursday.

A part of this rise from the telecom sector will also be contributed by spectrum auction, which Vaishnaw said is being planned for later this year.

“The next spectrum auction will be a limited one, since a large quantity of requisite spectrum was already auctioned last year. However, every financial year, we’re trying to hold an auction. We’re working on a proposal where any part that was left out in a previous auction is fulfilled,” Vaishnaw said. The revenue projection comes at a time when telecom operators had called for relief from 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.

However, the Centre’s revenue projection points at industry fees not being done away with.

Industry observers said that the expected revenue is higher than anticipated. Prashant Singhal, TMT (tech, media, telecom) markets leader at EY Global, said satcom spectrum allocation is unlikely to offer a massive boost to the Centre’s telecom revenue. “This is an indication of an upcoming spectrum auction for 5G, in line with what the telecom minister has previously indicated,” he said. A senior industry consultant, who requested anonymity, said it is not clear if the government’s revenue projection may include any transaction of its stake with telecom operator Vodafone-Idea. The centre presently holds 33.1% of the operator. Even with the spectrum auction at hand, analysts still hold the government’s revenue estimate to be high.

Ankit Jain, vice-president and sector head, corporate ratings, 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. 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 be somewhat explained by a fresh spectrum auction that the government may hold.”

Both Singhal and Jain concurred 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 massive. 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 that the government expects to earn this year (FY25),” Jain said.

A significant increase in revenue from telecom could come in FY26, since a 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 in FY25 fiscal, but a lot of it will get reduced due to certain pre-payments that have already been made in FY24. The sector, meanwhile, continues to push for reduction of duties. S.P. Kochhar, director-general of Cellular Operators Association of India, which counts all the three telcos as its members, said that in the full budget after the general elections, the industry hopes for “reduction of regulatory levies like licence 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”.

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.