The standing committee on Communications and Information Technology has asked the department of telecommunications (DoT) to diversify its revenue streams from the telecom sector to increase the government’s revenue without burdening the industry excessively.
This is because of the fall in growth rate of revenue receipts for DoT projected in FY25 compared to growth in previous years.
In FY25, DoT is estimated to earn a revenue of Rs 1.1 lakh crore, as per the details shared with the committee. The same includes Rs 25,501 crore from licence fee, Rs 3,000 crore from spectrum usage charges (SUC), Rs 80,766 crore from spectrum auction payments, and Rs 1,000 crore from other sources.
In the Budget estimates, the non-tax revenue from the telecom sector in FY25 were kept at Rs 1.2 lakh crore.
According to the committee, the total revenue receipts increased sharply from Rs 45,500.65 crore in 2020-21 to Rs 90,659.26 crore in 2023-24. However, the projections for 2024-25 is at Rs 110,267.31 crore (proposed).
“The decline in revenue receipts estimates for the year 2024-25 attributed to several factors, including market saturation, which limits the growth potential for Telecom Service Providers (TSPs) in terms of new customer acquisition and service expansion,” the committee said, adding that the Department may face challenges in managing its finances and planning long-term policies if the trend of unpredictable spectrum revenues continue.
Among other factors, implementation of new regulatory reforms, such as the reduction of spectrum usage charges (SUC) for spectrum acquired through recent auctions, ongoing financial challenges faced by certain telcos, debt restructuring, moratorium on AGR and spectrum payments, also limited the scope for DoT to boost its revenue.
“The committee believes that while the temporary moratorium on spectrum and AGR dues is a necessary relief for struggling TSPs, the department should develop a clear strategy to gradually phase out these moratoriums,” it said.
This could involve setting clear timelines for when payments will resume and a more stringent monitoring mechanism to ensure that deferred payments (including interest conversions into equity) do not negatively affect future revenue receipts, it added.
Besides, the parliament committee has recommended DoT to consider reviewing and revising the structure of SUC to make it more predictable and less volatile. It said the department can look at Introducing measures such as multi-year spectrum charges or adjustable rates linked to the inflation index, which could stabilise the revenue inflow from SUC.
According to the committee, heavy reliance on one time spectrum auctions for financial need could lead to revenue gaps in years when auctions are not held or when the spectrum supply decreases. Therefore, it has recommended that DoT should explore other streams like monetising data services, expanding into satellite broadband, and capitalising on emerging technologies like 5G and IoT, which could provide consistent and diverse income streams.
One of the other key areas which the committee asked DoT to look at is strategic monitoring and accelerated recovery from insolvency-afflicted telcos to boost its revenues.
The department should implement a proactive monitoring mechanism to track and support telecom companies currently undergoing Corporate Insolvency Resolution Process (CIRP), especially where recovery of dues is delayed, the committee said.
