Home >Industry >Telecom >COAI seeks relief for telcos, urges cut in spectrum charges, licence fee
The load on the Indian telecom networks has seen an exponential surge, primarily driven by 'work from home’ and extensive usage of telecom networks by all government agencies and private companiesd. Photo: Indranil Bhoumik/Mint
The load on the Indian telecom networks has seen an exponential surge, primarily driven by 'work from home’ and extensive usage of telecom networks by all government agencies and private companiesd. Photo: Indranil Bhoumik/Mint

COAI seeks relief for telcos, urges cut in spectrum charges, licence fee

  • COAI said the effective rate of spectrum usage charge should be reduced by 3% for all service providers and licence fee contribution should be lowered to 3% from 8%
  • It also sought refund of unutilised input tax credit, a move that will boost liquidity in an otherwise cash-strapped telecom sector

NEW DELHI: The Cellular Operators Association of India (COAI) has urged the government to rationalise the “high burden" of regulatory levies on telecom service providers, including spectrum charges and licence fee amid the covid-19-induced disruptions that has dealt a severe blow to the economy.

In a letter to finance minister Nirmala Sitharaman, the apex industry body said the effective rate of spectrum usage charge (SUC) should be reduced by 3% for all service providers and licence fee contribution should be lowered to 3% from 8% with immediate effect.

COAI also sought refund of unutilised input tax credit, a move that will boost liquidity in an otherwise cash-strapped telecom sector, and lowcost funding. “We request that soft loan at MCLR rate should be given to companies, using the GST input credit as collateral," COAI director general Rajan S. Mathews said.

Mint has viewed a copy of the letter.

“There has been a severe disruptive impact on the global supply chain, demand and supply elements and most importantly, on the cash flows of the companies due to the slowing economic activities. This downturn will have an impact on all payments including those of employees, interest, loan repayments and taxes," Mathews said.

The industry body sought exemption on goods and services tax (GST) on licence fee, SUC and payment of spectrum acquired in auctions. It also sought relaxation on service tax imposed on the amount of licence fee/SUC payable by telecom operators.

“In the last few days, the load on the Indian telecom networks has seen an exponential surge, primarily driven by 'work from home’ and extensive usage of telecom networks by all government agencies and private companies to remain ‘virtually connected’ due to the lockdown. Telecom service providers have invested and will continue to invest significantly in the telecom infrastructure (Capex and Opex) and it has enabled to meet the increased demand for telecom services," Mathews said.

Telecom operators—Bharti Airtel and Vodafone Idea—already reeling under mounting debt and shrinking revenues, came under severe stress following an unfavourable Supreme Court (SC) verdict in the 14-year long legal battle on adjusted gross revenue (AGR) in October 2019. Mukesh Ambani’s Reliance Jio Infocomm Ltd has already cleared its dues, which were much smaller when compared to the other two, given Jio launched its operations in 2016.

After paying part of their dues in various tranches, Vodafone Idea’s outstanding is at over 50,000 crore currently, including penalty and interest, while that of Bharti Airtel is nearly 26,000 crore. Bharti Airtel’s estimated amount includes Telenor India’s dues as well, which it had acquired in 2018.

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