Government's inaction on spectrum and licence fees dismay telecom companies

KOLKATA: Telcos have expressed dismay over government inaction on the industry’s repeated calls for cuts in spectrum usage charge (SUC) and licence fees, and added that the extension of the deferred payment tenure would mean additional outflow of Rs 80,000 crore for the carriers.

Mobile companies on Thursday however said the decision of Telecom Commission, apex decisionmaking wing in the communications ministry, to ease spectrum holding caps will facilitate M&As and ring in cost savings, leading to long-term stability In the sector.

“The decision to extend the deferred payment of spectrum from the current 10 equal annual instalments to 16 equal annual instalments will ease the cash flows in the initial years. However, since only the spectrum payment tenure is being extended, no real tangible financial benefit will accrue to the industry,” Rajan S. Mathews, Director General, Cellular Operators Association of India (COAI) said in a statement. COAI represents telcos such as Bharti Airtel, Vodafone India, Idea Cellular and Reliance Jio Infocomm amongst others.


In fact, the mobile operators will end up paying around Rs 80,000 crore more over the life of the debt, due to the longer tenure of payment.

“Along with extending the deferred payment schedule, a nominal interest rate should have also been prescribed instead of the existing rates,” Mathews said.

The TC, the apex decision-making wing in the communications ministry, earlier this week backed the Telecom Regulatory Authority of India’s suggestions to remove the 50% cap on intra-band spectrum holdings of telcos, and also increase the overall airwaves holding limit to 35% from 25%. It, however, imposed a separate 50% cap on combined spectrum holdings in the sub-1GHz bands (read: 700 Mhz, 800 Mhz and 900 Mhz bands).

However, the industry is also disappointed that the government did not do much to address systemic issues such as reduction of licence fees, SUC and the Universal Service Obligation Fund (USOF) levy, which is paid as a percentage of annual revenue to the government.

Mathews though said he was optimistic that the government will continue to look into the matter and that the earlier notion, that the telecom industry was simply a “cash cow for the government only to be milked for levies & taxes had changed for good.”

“Only in a conducive and mutually supportive environment can the industry continue to provide value and new technology to customers, as well as enhanced revenue to the Government,” Mathews said. He remained hopeful for urgent and immediate substantive relief measures. Extension of payment tenures and the cut in interest rates on penalties had been suggested by an inter-ministerial group (IMG) that was constituted last year to suggest measures to reduce financial stress in the telecom industry.