Ahead of the government appointed inter-ministerial group (IMG) finalising its recommendations, the Telecom Regulatory Authority of India (Trai) has suggested a slew of relaxation for the operators, which include lower licence fee and spectrum usage charge; a longer tenure for paying for spectrum acquired through auctions along with lower initial upfront payment; and a GST rate of 5% by declaring telecom as infrastructure sector against the 18% fixed by the government currently.
The recommendations for these relaxation by Trai, which have been sent to telecom secretary Aruna Sundarajan, were compiled after its meeting with the CEOs of the telecom firms on June 15. However, Trai has not committed anything on increasing the termination charges to cover its full cost and on which there’s a difference between the incumbents and Reliance Jio as it said that it is already in midst of a consultative process on this and would come out with its recommendations in due course.
While fixing termination rates is the sole jurisdiction of Trai, other issues being policy matters the final call would rest with the government. In fact, on matters like lowering licence fee, SUC and longer payment period for spectrum acquisition, Trai has reiterated its past recommendations wherein it had batted for such measures.
For instance, on lowering licence fee it has suggested that it be brought down to 6% from the current 8% of the adjusted gross revenue of the operators. The current 8% includes 5% which goes in Universal Service Obligation. Trai had in 2015 suggested that the USO component be reduced to 3%, thus bringing down the licence fee to 6%, and not changing the amount that directly accrues to the government. However, the industry has urged for a licence fee of around 3%.
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Similarly, while recommending a longer tenure for payment of spectrum amount, Trai has reiterated its 2015 and 2016 recommendation wherein it had said that operators be initially asked to pay only 10% of the bid amount, then be given a two-year moratorium followed by 18 equal instalments with interest spread over 18 years. Currently, the government charges 25% or 50% (depending upon the spectrum band) of the bid amount, followed by 10 equal instalments with interest spread over 10 years.
Here operators like Bharti had urged for increasing the moratorium to five years from the current two and instalments to 15 years from the current 10. Idea had urged that the number of instalments be increased to 20 years to make it co-terminus with the validity of licence period. However, Reliance Jio had urged that deferred payment be done away with as it led to irrational bidding. On SUC, the Trai has reiterated its September 2015 and January 2016 recommendation wherein it had suggested that there should be a flat rate of 3% on auctioned spectrum. However, operators are now pressing for a rate of 1%.
At a time when telecom operators have been batting for a lower 12% GST rate for telecom services, Trai has gone ahead and advised the telecom department to take up with the finance ministry for a still lower rate of 5% by declaring telecom sector as core infrastructure sector and economy enabler in the country. “Affordable telecom services would facilitate fast digitisation of the economy as well as proliferation of telecommunication services in rural and remote areas to achieve the mission of Digital India and thereby help in achieving aggregate efficiency across sectors such education, e-commerce, e-banking and agriculture, etc,” Trai has said.
“Affordable telecom services would facilitate fast digitisation of the economy as well as proliferation of telecommunication services in rural and remote areas to achieve the mission of Digital India and thereby help in achieving aggregate efficiency across sectors such education, e-commerce, e-banking and agriculture, etc,” Trai has said.