New govt should come out with a roadmap for easing financial constraints of telcos: COAI

The definition of adjusted gross revenue should be reviewed to include revenue from licensed activities only

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The telecom industry on Tuesday demanded that the new government should come out with a clear roadmap for easing financial stress in the sector in terms of rationalising various levies and spectrum fees.

A clear roadmap would send a positive signal to the industry as well as the investors, Cellular Operators Association of India (COAI) director general Rajan S Mathews said.

The definition of adjusted gross revenue (AGR) should be reviewed to include revenue from licensed activities only. "Once you address the AGR (adjusted gross revenue)definition issue, it has cascading benefits... That is the first thing they should look at," he said.

Telecom regulator Trai has already given its recommendations to the Department of Telecommunications (DoT) on the issue of AGR, but DoT is yet to take a final call on it. Telecom Regulatory Authority of India (Trai) had recommended that spectrum usage charge (SUC) should come down to 1% and licence fees should also be reduced.

The issue of double taxation is another major point. The industry gives payment for spectrum upfront, but still is there is tax on spectrum usage charge and licence fees, he said.

The income from interest, dividend, capital gains from sale of fixed assets, gains from forex fluctuation, income from rent, insurance claims and distributors' margin should not be included in the revenue of the telecom operators for the purpose of computation of licence fee and spectrum usage charges. Besides, revenue from sale of handsets and other subscriber terminals like routers should also be not included in the AGR.

If the above issues are addressed by the new government post the general elections within a timeframe of six to nine months, it would result in sizable benefits for the industry, he said.

"The industry is reeling under high debt and its revenue continues to remain under pressure. For most players, the Ebitda (earnings before interest, tax, depreciation, and amortisation) generated is not enough to meet the interest expenses," he said.

The telecom industry has been reeling under financial stress since the entry of Reliance Jio in late 2016. Low data tariffs and free voice calls offer from the new entrant pushed the financial of incumbents, including that of BSNL, on a downward spiral, apart from triggering a consolidation phase in the industry where now only three private players are left along with BSNL/MTNL.

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