Telcos seek cuts in levies in forthcoming Union Budget

Telcos, struggling with falling revenue amid a hyper-competitive market, have sought a reduction in levies, including licence fees and spectrum usage charges, besides avenues to mobilize cheaper funds to improve infrastructure.

In the recent pre-budget consultations with the department of telecommunications, operators also sought the abolition of customs duties for 4G/5G-related network products, and a temporary halt to collection of universal services obligation fund (USOF) fee from telecom companies.

Telecom companies have raised the issue of a cut in licence fee, and have sought a line of credit in the meeting. DoT has asked the telecom companies to submit their response so that it can take up these issues with the finance ministry.

Telecom operators must pay 3-6% and 8% of their adjusted gross revenue (AGR) as spectrum usage charges and licence fees, respectively, to DoT. Out of the 8% licence fee paid, 5% is USOF levy, which the government uses to improve connectivity and expand network in unconnected areas.

COAI too has requested a cut in licence fees from 3% to 1% of AGR. “Out of the ₹96,674 crore collected for the USOF between 2003 and 2019, ₹50,554 crore remained unutilized. While service providers are going rural, they still have to pay the USOF levy. Thus, USOF contribution should be put in abeyance till the entire existing amount of this corpus gets fully disbursed or it should be reduced immediately to 3% (instead of 5%),” COAI said in a presentation. The industry body also requested the government to facilitate funding at a lower rate of interest to finance network upgradation, maintenance and expansion.

The Telecom Equipment Manufacturers Association (TEMA) sought the creation of a special working group to look into devising a line of credit system for domestic manufacturers to supply ‘Make in India’ equipment.

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. The industry has sought abolishing these duties to bring down cost of equipment for rollout.
CT Bureau