Govt reduces licence fee for telcos completing network

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New Delhi, Oct 5 : Government has cut the licence fee for the telecom service providers which have completed over 95% network roll-out in a service area, except metros, a move aimed at encouraging operators to increase tele-density.

If the percentage coverage of total number of development blocks in a service area is covered by the licencee is over 95%, the applicable universal service obligation levy will be 3% instead of 5%, which means the licence fee is automatically reduced for category A, B and C circles to 8%, 6% and 4% respectively, DoT said while amending the UASL licence.

The benefit is, however, not applicable to coverage of metros. A DoT official said the move is aimed at encouraging operators to go beyond metros and fulfill the licence conditions for network roll-out to increase tele-density.

Annual licence fee which operators pay to the government on a revenue share basis includes 5% of USO levy.

Bharti Airtel, Reliance Communications and BSNL which have country-wide presence will be able to benefit from this.

The new rates will be applicable from April, 2009. The USOF contribution has been reduced to a flat 3% for those players whose services are available in over 95% of the residential areas.

However, the licence fee cuts will not be applicable in the four metros where they will continue to pay 10 per cent of their gross revenues to the government.

The DoT has also clarified that a telco only has to have “identifiable physical infrastructure” in a given area to be considered as having a presence there.

“Verification of coverage of each development block shall be based on verification of installation of identifiable physical infrastructure of the licensee for providing telecom access services,” said the DoT to all telecommunication companies.