Telcos seek cuts cheaper financing as budget sops, in levies
NEW DELHI: Telecom firms in India, which are decreasing decreasing revenue streams in the hyper competitive industry, have sought from the authorities reduction in levies like licence fees, spectrum usage charges, besides ways to mobilize cheaper funds to improve infrastructure.
The department of telecommunications on Monday held consultations with industry bodies and representatives of all operators.
“Telecom companies have raised the issue of cut in licence fee, and have sought a credit line in the meeting. We have asked telecom companies to submit their response by tomorrow evening and we will take these issues with the Finance Ministry soon,” a DoT official said requesting anonymity.
Telecom operators are liable to pay around 3-6% and 8% of the adjusted gross revenue (AGR) as spectrum usage charges and license fees, respectively, to DoT. Out of the 8% licence fee paid, 5% is USOF levy which government uses to improve connectivity and expand network in unconnected areas.
To be certain, these demands aren’t new and telecom companies have for long argued that these levies in India are among the highest in the world and have to be lowered.
In fact, in February 2018, the Telecom Regulatory Authority of India too advocated the DoT, as part of its”Inputs for Formulation of National Telecom Policy- 2018″, to review the rates of levies paid by operators because access spectrum is now being assigned through auction, and telecommunication networks have been the underlying infrastructure for growth of the digital economy.
“Out of the 96,674 crore gathered for the USOF between 2003 and 2019, Rs50,554 crore remained unutilized. While service providers are going rural, they still need to pay the USOF levy. Thus USOF contribution should be put in abeyance till the entire existing amount of the corpus gets fully disbursed or it should be lowered immediately to 3% (instead of 5%),” COAI said in its presentation to DoT on Monday.
The industry body has also asked the authorities to ease funding at lower rate of interest in order to plough more funds for community upgradation, maintenance and growth.
The Telecom Equipment Manufacturers Association has also sought the creation of a special working group to look into devising a credit line system to domestic manufacturers for distribution of’make in India’ equipment.
These requirements also come at a time when two from the 3 personal telcos have posted record losses after being struck by an unfavourable court verdict article a 14-year battle between telecom companies and the department of telecommunications on the definition of AGR from the industry.
Bharti Airtel swung to a Rs23,045 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 increased to Rs50,922 crore from Rs4,874 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 hunted abolishing these duties to bring down cost of equipment for rollout.