Tinkering with mobile termination charge (MTC), earned by cellular operators on incoming calls, will paralyze the telecom network in rural India, Vodafone MD and CEO Sunil Sood said.
"When we put up a site in village, the profit from that site is completely dependent on incoming calls. The earning of incoming calls depends on mobile termination charge (MTC). Any tweaking in MTC can cause all rural India sites to collapse," Sood said at the Cellular Operators Association of India AGM .
The new telecom operators have favoured abolition of mobile termination charges while incumbents like Bharti Airtel, Vodafone and Idea Cellular have defended it.
Sood said that in rural India, emigrant member of the family calls home because he can afford to make calls. "Once the sites are no more profitable, who will invest in rural areas." The government should resolve current stress in the sector as has been done in the past.
The government in 1999 decided to share profits with telecom sector in lieu of spectrum that it will allocate.
He said that now, the sector is paying dual charges by sharing profits through spectrum usage charge and also making upfront payment in auctions. This 5 percent of universal service obligation charges have been imposed on telecom operators to create fund that will invest to build telecom infrastructure in rural area.
"Telecom operators have reached 5 lakh out of 6 lakh villages in India but still we pay 5 per cent SUC. Vodafone India alone reached to 4,50,000 villages. We have achieved our goal of rural digital India," he added.
He demanded parity under Goods and services tax regime with other sectors.
This is because in electronics manufacturing sector excise has been abolished and firms only need to pay consumption tax in form of GST. The tax level on telecom services have been increased to 18 per cent from 15 per cent.
"The GST on telecom sector must subsume license fee of 3 percent and we should have only one final consumption tax of GST," Sood said.
At the annual general meeting, Bharti Airtel Managing Director & Chief Executive Officer (India and South Asia) Gopal Vittal was re-elected as the Chairman. Sood, will continue as the Vice-Chairman of COAI. - Vodafone