Union Budget 2023: After having met the 2022-23 communication receipts target by showing notional gain of Rs 30,000 crore by allocating 4G spectrum to BSNL, the department of telecommunications (DoT) has fixed an even higher target of Rs 89,469 crore for FY24. Here also the aim is to meet the target through similar means — non-cash receipts from BSNL for 5G spectrum allotment.
In both cases, BSNL will not pay the government in cash but offer equity in lieu of the spectrum. This is very different from actual revenues flowing to the government by private operators who pay licence fee, spectrum usage charges and auction money showing this as revenue on the lines of receipts.
The actual revenue for DoT, therefore, is likely to fall short by about 50% in FY24, as licence fee from the telecom operators and second instalment of 5G spectrum will be around Rs 40,000 crore, according to industry executives.
“The spectrum allocation value will be notional, and won’t make any contribution to the government’s non tax revenue. There will be two entry in the books of accounts by the government – one will be shown as expense as equity into BSNL and the other as inflow for DoT towards spectrum allocation,” an industry expert said.
For FY23, DoT has revised its revenue target by over 30% to Rs 68,784 crore (including Rs 30,000 crore as BSNL equity infusion for spectrum). However, in actual the telecom department will end up getting only Rs 39,000 crore, which is 26% less than the earlier target of Rs 52,806 crore.
Another increase in revenue for DoT in FY24 can happen if it decides to go ahead with fresh spectrum auction, which industry executives said would be difficult given the telcos are yet to monetise 5G services and one operator Vodafone Idea has not even started deploying the 5G spectrum.
Currently, Bharti Airtel and Reliance Jio are the only operators which are deploying 5G networks across the country. The telecom operators have not yet started charging incremental pricing for 5G from the users.
“The government will move ahead based on the demand from telcos as there is no point in conducting a failed auction,” a government official said, adding that it would consult the telcos first before going ahead with the next spectrum auction. Further, possibility for satellite spectrum auction and spectrum allocation for private 5G needs is not ruled out.
For BSNL, the government is expected to allot spectrum worth Rs 62,000 crore in the 3300-3600 MHz band and 700 MHz band to rollout 5G services. The telecom operator is currently working with its partners to launch 4G services using indigenous technology equipment.
While for FY23, DoT’s receipts surpassed the target because of non-cash revenue earned from BSNL, the telecom department in FY22 actually exceeded the Budget estimate of Rs 53986.72 crore by collecting Rs 85,828 crore. In FY22, the government exceeded the target mainly because of pre-payment of spectrum instalments by Bharti Airtel and Reliance Jio. Jio had pre-paid Rs 30,791 crore clearing all dues towards spectrum bought in auctions before March 2021. Similarly, Bharti had paid Rs 24,334 crore to clear deferred liabilities of earlier auctions.