While lack of spectrum hits telcos, Trai bats for cut in licence fee

By: | Published: January 7, 2015 1:36 AM

The Telecom Regulatory Authority of India (Trai) recommended lowering the revenue share licence fee...

Spectrum auction, 3G spectrum, TraiThe Trai has made these recommendations on a suo motu basis on a wider paper on rationalising the computation of AGR for the purposes of payment of licence fee. Reuters

The Telecom Regulatory Authority of India (Trai) on Tuesday recommended lowering the revenue share licence fee, which the operators pay to the government, to 6% from the current 8% of their adjusted gross revenue (AGR). The regulator also said that the levy on the operators for the Universal Service Obligation Fund (USOF) should be brought down to 3% of their AGR against the current 5%.

The Trai has made these recommendations on a suo motu basis on a wider paper on rationalising the computation of AGR for the purposes of payment of licence fee.

According to the regulator, currently, of the 8% licence fee, 5% goes to USOF and the remaining 3% goes to the government. If the licence fee is reduced to 6% with the USOF contribution at 3%, the accrual to the government at 3% would remain intact.

There has been a long-pending demand by the industry to reduce the USOF levy as there’s over R52,000 crore in the account, of which only 30% has been utilised till now. Operators have by now penetrated the rural areas by their own efforts and do not need government-aided projects for the purpose.

On the computation of AGR for the purposes of payment of licence, the Trai has clearly delineated the non-telecom earnings, which would not be included in the definition. For the purposes it has brought in the concept of applicable gross revenue (ApGR), which would be deducted from the gross revenue to arrive at AGR. For instance, income from dividend, interest, forex, capital gains, etc, would not be counted towards AGR.

So far, the government does not distinguish between revenue accruing from telecom services and other such revenues.

Though the operators pay the licence fee on the basis of their earnings from telecom services as per the order of the telecom tribunal, this has been contested in the Supreme Court by the government.

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