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Thomas K. Thomas

New Delhi , July 27

IN a move that could encourage operators to bundle mobile handsets with every connection, the Department of Telecom is considering to exclude revenues earned from sale of handsets from the company's annual income used to calculate the licence fee payable to the Government.

At present, if cellular operators sell a handset along with a connection, then the revenues accruing from the sale is added to their annual income. Since operators pay between 6 per cent and 10 per cent of annual revenues as licence fee, bundling of handsets adds to the operator's licence fee. According to the high-level committee set up by DoT to review the definition of adjusted gross revenue, so far only one company has reported revenues from sale of handsets.

If DoT exempts revenue from sale of handsets from the ambit of gross revenue, then more operators will be able to offer incentive schemes on handsets without any revenue implications. The committee has said that the move may not have any direct impact on the Government's income either. However, it said that if operators chose to offer incentive schemes then the revenue implications for the Government could not be ascertained at this stage.

The committee has also recommended that all operators should be asked to prepare accounts on the basis of segment reporting guidelines issued by the Institute of Chartered Accountants of India to know the revenue relating to telecom business.

The committee has, however, declined to remove non-telecom revenues such as income from sharing of infrastructure and income from interests and dividends from the ambit of adjusted gross revenue. Telecom operators have been demanding that non-telecom revenue should be kept out of the annual revenue taken to calculate the revenue share.

At present, the gross revenue on which the licence fee is calculated includes revenues from non-telecom activities, which, according to operators, accounted for about 10 per cent of the total revenues. For instance, if an operator takes a loan and puts it in fixed deposit in a bank, then the interest earned on the deposit is added to the total revenue.

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