DoT may cut levies to boost telecom sector

As part of the national telecom policy, which is likely to be released next month, various levies and charges would be reviewed in line with the input tax credit available.

The government is looking at reducing the spectrum usage charges and other levies in a move to help the stressed telecom sector emerge stronger.

As part of the national telecom policy, which is likely to be released next month, various levies and charges including SUC would be reviewed in line with the input tax credit available.

“We have explicitly said SUC will be rationalised so that it will cover administrative charges. That is a very clear indication of the direction in which we intend to go. So that will get done,” Telecom Secretary Aruna Sundararajan said on Friday. 

The revised SUC and other levies will be implemented immediately after being notified in the new telecom policy. 

Telecom operators pay 8 per cent of their adjusted gross revenue as licence fee and SUC is pegged in the range of 3 to 6 per cent, depending on the type of airwaves they have. The industry has been demanding lower taxes and levies, which add up to about 30 per cent of the revenues. 

The inter-ministerial group, which was set up last year to address the financial stress of telcos, had not offered any relief on SUC and licence fee in the measures announced a few months ago. 

The outstanding debt in the industry is pegged at over Rs 4.5 trillion, incurred mainly on account of payments for spectrum and other levies. 

As part of the draft telecom policy, termed National Digital Communications Policy, 2018, the government proposes to review levies and fees including licence fee, universal service obligation fund levy and concept of pass through revenues in line with principles of input line credit. It has also proposed rationalising SUC to reflect the cost of regulation and administration of spectrum. 

The other major policy initiative will be around optimal pricing of spectrum for auctions, which means that the reserve price will not be too steep to deter operators from participating.

The government felt that in the last auction about 62 per cent of spectrum remained unsold and the objective would be to sell the entire spectrum.

“The first objective would be to see that all spectrum is sold. Also, we have had a situation where due to lack of device ecosystem like in the 700 MHz band, there were no takers -- such anomalies need to be ironed out,” Sundararajan said.

The government aims to more than triple broadband penetration to 100 per cent from the current 30 per cent by 2022. For that, a large amount of spectrum is required along with adequate fibre backhaul. 

The input resources including spectrum have to be priced optimally in order to achieve the outcome.

The DoT is hopeful that once the current phase of consolidation is over, profitability will return to the sector as there will be three to four big players in the market ready to invest heavily. 

Photograph: Himanshu Sharma/Reuters.