“Apart from having one of the highest incidences of visible levies in the world, Indian telcos have a large hidden cost, which results in 58 per cent of their revenues becoming liable for government taxes.
We have 18 per cent GST and 12 per cent licence fees and spectrum use charges. This 30 per cent is very visible to everyone. What is not visible is the price of spectrum, if converted to an annuity value and calculated as a percentage of revenue. It adds another 28 per cent of industry revenue (as a cost).
So, if you take the industry revenue of Rs 231 crore and you calculate the total value of spectrum given out — which is close to Rs 6 trillion today, the annuity value comes to 28 per cent of the revenue. This is on top of the visible costs. Therefore, 58 per cent of revenue is reflected as government levies in a country where the tariffs are the lowest.
The operational cash generation of telcos can be released for investments if the government reduces the tax burden.
With each transition of technology, especially from 4G to 5G, the data being carried by the networks is massive. This data cannot be carried wirelessly and you need fibre to carry it. Unfortunately, the right of way regulations in the country have been very difficult. The government has taken some steps towards rectifying that. But if 5G is to be successful in the country, it is very important that this right of way mess — which exists — is sorted out.
5G brings with it features like low latency, ultra-low latency, massive machine type communication and the ability to slice networks. “These will contribute to automating manufacturing in a manner, which was not possible earlier. Over the next 2-3 years, manufacturing, including internet-of-things, would be one of the key drivers of technology being deployed for the betterment of society, and improving efficiency and productivity.”