The Centre expects revenues from the telecom sector to more than double to ₹1.33 lakh crore in the next financial year on the back of increased licence fees and spectrum usage charges by operators, following the Supreme Court’s ruling on the adjusted gross revenue (AGR), along with the upcoming spectrum auctions.
According to the government estimates, in the current financial year (2019-20), its revenues from ‘other communication services’ will be ₹58,989.64 crore against a budgeted amount of ₹50,519.81crore.
“Receipts under ‘Other Communication Services’ mainly relate to the licence fees from telecom operators and receipts on account of spectrum usage charges,” the Budget document said, adding that the Department of Telecom collects the recurring licence fees from various service providers.
According to experts, the increased revenue estimate could point to realisation of some of the AGR dues, along with the proceeds from the upcoming spectrum auctions, including those of the 5G airwaves.
Ankit Jain, assistant vice-president, corporate ratings, ICRA Ltd, said, “Despite the deferral of spectrum payments due in FY2021 and FY2022, the higher BE for FY2021 can be attributable to some participation in 5G spectrum auctions and expectation of payments of AGR-related dues.”
Following the Supreme Court’s October 24 ruling on the definition of AGR, the telecom industry owes the government ₹1.47 lakh crore in licence fees (₹92,642 crore) and ₹55,054.51 crore in spectrum usage charge.
The debt-ridden industry on Saturday expressed disappointment with the Budget, given that none of its demands, including a reduction in levies, was addressed.
COAI upset
Rajan Mathews, DG at the industry body COAI, said, “...it is disappointing that there were no announcements made regarding the rationalisation of levies and taxes currently imposed on the severely distressed telecom sector and ... telecom was not given an infrastructure status even though a slew of crucial reforms has been announced on infrastructure. The telecom sector, which is the backbone of the country’s economy, did not receive significant support.”
Likewise, Prashant Singhal, Emerging Markets TMT Leader, EY, said, “While the telecom sector will be pivotal to realising Digital India’s vision, the Budget brings little cheer for it. The Budget factors in a 2.5 fold increase in communication services receipt for this fiscal at ₹1.33 trillion, which points to realisation of certain AGR dues and proceeds from the 5G spectrum auction. Tariff reset, certain relief on the AGR judgement and a clear policy roadmap is eminent for the industry to be viable and help meet Budget estimates.”
