The telecom industry has sought a huge revival package from the government, covering the entire gamut of levies, tenure of spectrum lease and easier payment terms for statutory dues. Since the launch of Reliance Jio in 2016, this is the first time that all the three operators are united in their demands, which have been voiced through their association, Cellular Operators Association of India (COAI).
In its communication to the department of telecommunications, the finance ministry and the Cabinet secretary, the big demand of COAI is extending the tenure of leased spectrum to operators for a period of 40 years against the current 20-year period. Further, it has sought that the moratorium on spectrum payments be extended to 7-10 years from the current 2 years. These two demands are for the currently leased spectrum and its payments as well as spectrum to be allotted in future auctions.
“This will give sufficient impetus to the investors and would be a massive reassurance for the lenders and would help ensure better finances to the telecom service providers,” COAI has said.
Stating that under the current revenue sharing regime where 32% of revenue goes as taxes and levies, the industry has demanded a major reduction in licence fee and spectrum usage charge, much more than what was recommended by the Telecom Regulatory Authority of India (Trai).
Accordingly, the demand is that the overall licence fee be reduced to 2% of the adjusted gross revenue of operators from the current 8%. The licence fee has two components – general exchequer where 3% goes and universal service obligation fund where 5% goes. COAI has written that both the components be reduced to 1% each.
Trai has recommended that the USO levy be reduced to 3% from 5% so that the overall licence fee becomes 6%, a reduction of two percentage points.
On the spectrum usage charge (SUC) the demand is for reduction by 3 percentage points for all operators. Currently, it varies between 3-6%, depending when the operators acquired spectrum in respective bands.
On the financial side, the industry has sought that interest rate on all outstanding deferred payment liabilities for acquiring spectrum through auction be reduced to 4% or less and this be made as a benchmark rate for future auctions as well. “The current interest rates for deferred payment liabilities for acquiring spectrum through auction is in the range of 9% to 10% which are very prohibitive,” COAI has said.
The industry has also demanded that the definition for calculating the adjusted gross revenue (AGR) be streamlined in such a manner that only telecom revenues from customers are considered and non-telecom revenues kept out of it.
The telcos have also demand that the Trai consultation paper on floor price for tariffs be completed at the earliest and a waiver should be given on submitting financial and performance bank guarantees (BGs). COAI has said that BGs are a financial burden on the operators as with the current perception on the health of the sector, the banks are refusing BGs or asking huge margin money.
COAI communication to the government has been sent at a time when the latter is working on a revival package for the industry and measures like reduction in taxes and levies, moratorium, doing away with BGs, etc are under consideration.
Just the reduction in licence fee by two percentage points would provide a relief of around `3,000 crore annually to the operators.