Advertisement


Advertisement

Thread Rating:
  • 5 Vote(s) - 3.4 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Govt withdraws licence fee cut for telcos
Advertisement
#1
NEW DELHI: The government has called off its decision to slash the licence fee for telecom operators with large network presence by up to a third from April 1, following opposition from the finance ministry, giving a Rs 2,000-crore blow to the industry. The communications ministry will soon notify all telcos that the “licence fee cut has been kept in abeyance,” said a department of telecom (DoT) official, who requested not to be named.

The DoT had, last year, announced that the proportion of the revenues telecom operators pay as licence fee to the government would be cut by 2% of their total revenues if they prove that their services are available in 95% of the residential areas in a state or a telecom circle, with effect from April 1, 2009.

At present, telecom operators pay 6%, 8% and 10% (based on the ranking of their circles) of their annual gross revenues (AGR) as licence fee. As per DoT plans, these would have come down to 4%, 6% and 8% of AGR for operators with comprehensive networks in 2009-10.

If implemented, the licence fee cut would have helped telcos save Rs 2,000 crore next fiscal, according to industry executives, who requested not to be named. The rollback decision would hit Bharti Airtel, Reliance Communications, Vodafone Essar and BSNL the most as their networks cover all census towns and large villages in several states, they added.

According to the DoT official, the department has not decided on any new time frame to implement the fee cut. A decision on licence fee cut will now be made by the new government that comes to power after the April-May general elections, officials said. DoT could not secure the Cabinet approval to reduce the percentage of total revenues telcos share with the government before the model code of conduct for elections came into play, they added.

At present, telcos pay 10% of their revenues as licence fee in category ‘A’ circles (Tamil Nadu and Maharashtra, among others) 8% in ‘B’ zones (Kerala, Punjab and Haryana, among others) and 6% for ‘C’ circles (Himachal Pradesh, Bihar and Orissa, among others). As per last year’s announcement, these would have come down to 8%, 6% and 4% for operators with networks covering over 95% of the residential areas in a circle.

Interestingly, the licence fee cut would not have impacted the exchequer as DoT had planned to reduce telcos’ contribution to the Universal Service Obligation Fund (USOF) for rural telephony, which is paid out of their licence fee, and which is flushed with funds.

Currently, all operators pay a flat 5% of their total revenues towards USOF. That is half the licence fee of an ‘A’ circle player goes to USOF, while almost 85% of a C circle operator’s licence fee goes to fund rural telephony. This was to be reduced to a flat 3% for those players whose services are available in over 95% of the residential areas.

This would have ensured the ‘A’ and ‘B’ circle telcos’ contribution to the exchequer remained exactly the same at 5% and 3%, while for the C circle operators it would have gone down from 1% to nil.

As of 2007-08, the size of USOF was Rs 20,500 crore and it is now estimated to have crossed Rs 25,000 crore. And, as of September 2008, just 27% of the amount has been utilised, according to telecom regulator Trai. Studies have revealed that it would not cost more than Rs 12,000 crore to set up infrastructure for mobile services in all rural areas of the country.

Reply
Thanks given by:
Advertisement
Advertisement




Possibly Related Threads...
Thread Author Replies Views Last Post
  General News: Govt launches National Broadband Mission nairrk 0 389 12-19-2019, 07:50 AM
Last Post: nairrk
  General News: Indian telcos offer world's cheapest data but not the fastest. Here's proof nairrk 0 703 03-27-2018, 11:40 AM
Last Post: nairrk
  Update: UIDAI nod to telcos' blueprint on new SIM reverification modes nairrk 0 585 11-16-2017, 07:42 AM
Last Post: nairrk
  General News: Govt imposes 10% customs duty on imported mobile phones nairrk 0 685 07-01-2017, 01:41 PM
Last Post: nairrk
  General News: Telcos must inform customers about data usage limits on unlimited BB plans: TRAI nairrk 0 884 11-01-2016, 12:01 PM
Last Post: nairrk
  General News: Govt mulling to make 2 Mbps as minimum broadband speed: Report nairrk 0 713 08-20-2016, 12:32 PM
Last Post: nairrk
  Breaking News: Govt grants regulatory approval for Nextbit Robin to be sold in India rahul1117_kumar 0 478 05-06-2016, 06:38 PM
Last Post: rahul1117_kumar
  Breaking News: Apple to set up own retail outlets soon as Govt may waive 30% sourcing norm: Report rahul1117_kumar 0 465 04-22-2016, 11:39 AM
Last Post: rahul1117_kumar
  General News: Call drops: Telcos earning Rs 250 crore a day but not investing, says TRAI nairrk 0 548 04-22-2016, 08:53 AM
Last Post: nairrk
  Breaking News: LeEco applies for single-brand retail licence in India rahul1117_kumar 0 437 04-16-2016, 01:07 AM
Last Post: rahul1117_kumar

Forum Jump:


Users browsing this thread: 1 Guest(s)
Advertisement