Committee of Secretaries to shortly submit recommendations on telecom sector

Our Bureau New Delhi | Updated on October 29, 2019

A Committee of Secretaries (CoS) under the Cabinet Secretary will examine all aspects and suggest measures to mitigate the financial stress being faced by the telecom sector, keeping in view the larger public interest and improving telecom services for the subscribers.

The CoS will look into the demand of telecom service providers (TSPs) for deferment of spectrum auction payment due from them for the years 2020-21 and 2021-22 in order to ease the cash flow situation of the Industry, a government document seen by BusinessLine said.

Also on agenda will be a re-look at the Universal Service Obligation Fund (USOF) charge which is currently at 5 per cent while the TRAI in their earlier recommendations have suggested for reduction of this charge to 3 per cent. The request of TSPs for reduction of spectrum usage charges (SUC) may also be examined, it said.

"Representations have been received from major TSPs regarding the financial stress being faced by them. Future commitments for payments of spectrum purchased by TSPs and the licence fee including the contribution to USOF have been cited as issues which require to be looked into. In this regard, recommendations of TRAI on reduction of USOF contribution and spectrum usage charge is being relied upon by the TSPs," the document said.

"The TSPs claim that large amount of input tax credit is available to their credit in government account which they request should be adjusted against future government levies. Further, the recent Supreme Court order on definition of average gross revenue (AGR) is expected to further enhance the financial stress of these TSPs. A case is also being made for viable pricing for voice and data, which falls in the realm of TRAI," it added.

In parallel, it is expected that the TRAI will also examine the aspect of minimum charge for voice and data services to ensure that the financial health of the telecom sector remains robust and viability is sustained, the document said.

According to the document, an analysis of the financial performance of the TSPs reveals that the aggregate gross revenue of the industry between the years 2017-18 and 2018-19 has decreased. The price of data for the customer at an average of Rs 8 per GB is perhaps the lowest in the world. The average revenue per user (ARPU) per month has declined from Rs174 in the year 2014-15 to Rs 113 in 2018-19. It is also estimated that a subscriber on an average uses 10 GB of data and 700 minutes mobile talk time per month.

The CoS is expected to meet shortly and submit their recommendations in a time bound manner.

Published on October 29, 2019

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