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Telcos Hope New Government Will Lift Burdensome Levies

Telecom ministry under the new BJP-led NDA government will need to set out a clear roadmap to ease the burden of levies on the sector. Issues including license fee cut and spectrum charges should be taken up at the earliest, preferably in 6-9 months, say industry executives.

“Getting the industry back to financial health should be a national imperative amid a weakening economic growth, given the substantial pull through impact of the telecom industry on the rest of the economy (a 10 percent increase in broadband penetration leads to 1.4 percent increase in GDP),” said Rajan S Mathews, director general, COAI, the apex industry grouping representing Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio.

Rueing that hefty levies has been a major gripe for India’s beleaguered telecom industry at a time when the industry is plagued by price wars and debt upwards of Rs 7 lakh crore, Mathews said a cut in levies is considered critical to provide some relief to the stressed sector.

Besides, the industry executive said the government should also review license fee, spectrum usage charges (SUC), re-define Adjusted Gross Revenue, provide debt-carrying cost relief by enhancing the duration of payments and reducing interest; and Universal Service Obligation Fund levy to enhance the overall ease-of-doing -business. Currently, levies account for nearly 33 percent of every Rs 100 earned by a telco. Data from Trai shows that licence fee mop-up by the government in the December quarter rose 0.03 percent sequentially to Rs 2,890 crore, while SUC rose by 2 percent to Rs 1,064 crore.

In the medium term, creation of national digital grid by establishing a national fibre authority would allow the government to implement the policy level plans on the ground. Besides, the task of issuing 5G network trial licenses to the telcos along with the spectrum and also preparing the Cabinet note for the much-awaited spectrum auction in November 2019 will also be a key milestone of the new government.―New Indian Express

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