Telecom Industry Expects License Fee Reduction In Budget 2020

The telecom industry, which is being plagued by losses originating from the Adjusted Gross Revenue (AGR) and hyper competition, is expecting the Government to reduce license fee in the upcoming Budget.

“The industry has bitten the bullet and increased the tariffs. Now we are seeking for a reduction in license fee, for which we made a representation to the Finance Minister Nirmala Sitharaman last week,” Cellular Operators Association of India (COAI) Director-General Rajan S Mathews told BusinessLine.

“We have requested a reduction in license fee to 3 percent from the present 8 percent of the revenue earned and slashing of Spectrum Usage Charges (SUC) to 1 percent from about 6 percent currently,” Mathews added.

The telecom industry body had also made representations to the Department of Telecommunications (DoT), which is also held a couple of open houses on the issue. A number of operators had also raised the issue both with the Finance Ministry and DoT.

“We are hoping there will be a reduction in license fee in the Budget,” he said, adding the rise in tariffs would also result in an increase in revenues to the Government.

In an attempt to mitigate the acute financial stress in the sector, telecom operators – Bharti Airtel, Vodafone Idea and Reliance Jio Infocomm – had announced plans to hike tariffs from December.

Earlier, a Supreme Court ruling on October 24 had upheld the Centre’s plea to recover AGR of about Rs 92,000 crore from telecom service providers, a move that pushed operators to post further losses.

For the second quarter ended September 30, Bharti Airtel had posted a net loss of Rs 23,045 crore, its highest-ever net loss, mainly on account of provisioning for AGR payouts. Rival Vodafone Idea also recorded a loss of Rs 50,921 crore, the highest-ever loss for a corporate in India, during the same quarter.

Airtel has provided for an additional charge totalling Rs 28,450 crore for AGR payments. The same for Vodafone Idea stood at Rs 25,677.9 crore.―The Hindu Business Line