Need Lower Licence Fee, Spectrum Usage Charges: Telecom Industry's Budget Wish-List

Companies have long argued that AGR should comprise just revenue accrued from core services, while the government says it should include all revenue.

The telecom sector has been battling one crisis after another - from competitive pricing to most recently, a re-definition of Adjusted Gross revenue which implies dues worth Rs 1.47 lakh crore for telecom companies including Bharti Airtel and Vodafone Idea. Days ahead of the presentation of Union Budget 2020 in Parliament, the telecom industry has a number of expectations from Finance Minister Nirmala Sitharaman, who is widely expected to announce measures to spur growth at a time the economy is estimated to record its worst annual expansion rate recorded in 11 years.

Rajan Mathews, director general of industry body COAI, told NDTV that the telecom sector is facing a huge cash crunch. The telecom industry seeks a cut in spectrum usage charges to 4-5 per cent, and urges the finance minister to lower the licence fee in the Budget, he said.

He also said the telecom industry needed a reduction in duties and must shifted its focus to rolling out a smooth 5G network.

Meanwhile, former Airtel India CEO Sanjay Kapoor said the industry seeks GST relief from the government in its upcoming Budget.

The government is expected to announce measures to ensure more disposable income in the hands of consumers to enable the telecom service providers to boost their average revenue per user (ARPU).

"Data has moved up the hierarchy of discretionary spending," Mr Kapoor added.

He also said the government should lower its expectations from the sale of spectrum.

"Current position of the telecom industry has more to gain with decisions lying outside the budget," he said, speaking on the adjusted gross revenue (AGR) matter.

"In the short run, the government must drastically reduce the penal terms of the AGR verdict and stagger payments related to AGR verdict, so that the money can be deployed by service providers to stay relevant in the market and enhance customer experience," he said.

This month, the Supreme Court rejected a plea by telecom service providers including Bharti Airtel, Vodafone Idea and Tata Teleservices seeking a review of its earlier order that allowed the government to collect dues worth Rs 1.47 lakh crore from them.

The payment dispute centers around the definition of adjusted gross revenue. In its October ruling, the top court upheld the telecom department's definition of AGR.

Companies have long argued that AGR should comprise just revenue accrued from core services, while the government says it should include all revenue.

"For long-term sustainability, the policy must allow operators to raise prices to a level where ARPUs can sustain their businesses and can invest in future technologies and develop a globally competitive customer experience," Mr Kapoor said further.

"Finally, the government must rationalise the AGR definition to exclude non-telecom revenues and simplify the tariff structure of the industry to one lower charge rather than multiple types of charges," he added.