Budget 2020

No respite for telecom sector on licence fee reduction

Our Bureau Mumbai | Updated on February 01, 2019 Published on February 01, 2019

Telecom operators expecting a reduction in levies and licence fees were left disappointed as the interim Budget did not offer any respite. The new telecom policy unveiled recently had promised that levies imposed on telecom industry would be rationalised. Telecom operators pay nearly 30 per cent of their revenues to the Centre in the form of licence fees, spectrum charges and other taxes.

The government expects a 5.8 per cent increase in revenue at ₹41,519.76 crore in 2019-20 from the stressed telecom sector, against the revised revenue estimate of ₹39,245 crore for the current fiscal ending March 31.

“Bharti Airtel and Vodafone Idea, under the aegis of COAI, have approached the government for deferment of spectrum payments by two years, however, no mention on spectrum usage fee or payments will mean continuous strain on margins,” said Mayur Saraswat, Head of Digital, IT & Telecom Vertical, Teamlease Services.

The telecom sector is undergoing financial stress due to heightened competition and high payout for acquiring spectrum. The incumbent operators have reported drastic decline in revenues.

This has also brought down the revenue they share with the Centre. The Revised Estimate (RE) of non-tax revenues from communication services for FY2019 stands at ₹39,245 crore, which is 19 per cent lower than the Budget Estimate (BE) of ₹48,661 crore.

“The reduction in RE is primarily on account of lower-than-projected revenues generated by telecom sector resulting in lower share to government,” said Harsh Jagnani,Vice-President & Sector Head-Corporate Ratings, ICRA.

“While the Interim Finance Minister spoke extensively about investing in infrastructure such as road, railway, highways, electricity amongst others, geared to target a $10-trillion economy; the telecom sector, which is the backbone of the country’s economy, did not receive significant support,” said Rajan S Mathews, Director General, Cellular Operators Association of India.

Published on February 01, 2019
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