Telecom dept to look into rationalisation of levies

This has been a long standing demand of the industry mainly Airtel and Vodafone Idea since the entry of new player Reliance Jio in the telecom sector

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Telecom dept to look into rationalisation of levies
Ravi Shankar Prasad

Telecom industry, reeling under financial stress, might get a breather soon as the department of telecommunications has decided to look into rationalisation of various levies including spectrum usage charges (SUC).

A committee under the chairmanship of telecom secretary Aruna Sundararajan has been set up to look into this issue of rationalisation and remove ambiguity in ease of doing business, Communications minister Ravi Shankar Prasad told reporters.

This has been a long standing demand of the industry mainly Airtel and Vodafone Idea since the entry of new player Reliance Jio in the telecom sector.

The committee will submit its report in two weeks. Besides, the minister will meet all telecom players to address their various concerns.

"The telecom sector has been going under stress for a long time. There is some element of disruption, but the competition also brought in the cheapest mobile rates and cheapest data in the world. While acknowledging some disruption, we also need to acknowledge the benefit which it has brought to mobile users. Consolidation was a natural process," Prasad said.

The national digital communications policy 2018 had listed out rationalisation of various levies, including licence fees and SUC, as one of the main objectives.

Telecom regulator TRAI had earlier recommended a flat SUC for telecom operators at 3% of their adjusted gross revenue and bringing it down to 1 % gradually. Currently, operators pay 3-5% SUC depending upon the spectrum band they hold – whether it is administratively allocated spectrum or through auction.

Cellular Operators Association of India (COAI) has been asking government to address the issue of double taxation. Operators pay for spectrum acquired in auction, but the industry continues to get taxed by SUC and license fee. Apart from SUC, telecom operators pay 8% of their AGR as licence fee. COAI says various taxes and levies come to about 30% of the revenues. According to estimates, the total debt of the telecom industry stands at around Rs 7 lakh crore.

On the revival of sick telecom PSUs BSNL and MTNL, the minister said a Cabinet note will be floated soon as details are being worked out.

Both the PSUs are national assets, they operate in strategic areas including for Defense and Home Affairs. In case of need natural calamities like from a cyclone in South India or latest floods in Orissa, these PSUs have given free services to people.

"A total package is being worked out, which will be competitive. Also, the PSU employees need to be cooperative and professional to live in today's competitive world," the minister said.

Both BSNL and MTNL have been incurring losses and with huge employee costs are struggling to manage day to day operations. Though, the data consumption on mobiles grew substantially, the financials of the incumbents took a hit after the debut of RJio, which also led to consolidation in the telecom sector. Now, only three private players are left apart from the ailing telecom PSUs, BSNL and MTNL.

The minister also said India has made a mark in electronic manufacturing. We have become second biggest player in the field of mobile manufacturing and now, we aim to work towards making India an export hub for electronic products.

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