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Budget 2019: Telcos Unlikely To Get Relief

The Union budget is unlikely to propose any reduction in levies for telcos or allow them more time to clear their spectrum dues to the government, sources privy to the development said.

The mobile operators association COAI has urged the new government to slash the overall levies to 4-5 percent to ease the financial burden on the stressed telecom sector in the wake of intense competition. At 30 percent, India’s telecom levies are the highest in the world.

Another key demand of the industry that they be allowed more time to repay for the spectrum bought in earlier auctions and that their moratorium period be increased to four years and payment period to 18 years while keeping the Net Present Value unchanged is not likely to find favor with the Finance Ministry as the North Block feels that the sector’s current state is its own doing.

The entry of aggressive new operator, Reliance Jio, and its free voice and dirt-cheap data offerings, has prompted incumbent telcos like Bharti Airtel, Vodafone and Idea Cellular to respond, hitting their overall financials and business plannings.

But the ministry feels that below-cost tariffs are unhealthy when the telcos are undertaking network expansion, raising capital through rights issues and IPOs, taking high sales, marketing and branding exercises. It feels that helping them survive in the market by providing them fiscal sops is not the government’s responsibility.

Neither the interim Budget nor the 2018 Budget had any give-aways for the telecom sector, even though the industry pleaded for government support saying it was a must for realizing the PM’s vision of a fully connected and empowered Digital India.

The telecom industry is saddled with nearly Rs 4.5 lakh crore of debt, taking stock of which, the government had in 2017-18 approved a proposal for allowing operators more time to pay for the spectrum they bought in auctions to 16 years payment period.―India Today

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