Malini Bhupta Moneycontrol News
Telecom companies could get a breather if the Department of Telecom accepts the recommendations of sector regulator TRAI. In a letter to Telecom Secretary Aruna Sundararajan, TRAI has suggested measures to give relief to the telecom industry, which is currently sitting on debt of Rs 4.6 lakh crore.
The letter reiterated some of the key measures suggested by the telecom chiefs to improve the financial health of the industry. Among other points, TRAI has said that the GST rate of 18 percent for the telecom sector should be reduced as it would benefit the end consumer and help achieve the Digital India vision.
The letter stated that telecom companies have sought reduction in licence fees and the Universal Service Obligation levy, relaxation in spectrum payment terms, ease of doing business and promotion of wireline infrastructure.
The letter to the DoT secretary said that while the regulator was engaged with the operators on all issues, the “the authority reiterates that DoT may favourably consider these recommendations as they would help in minimizing the financial stress of the telecom companies and enable them to offer quality service to consumers at affordable prices.”
A key ask of the sector has been to lower the licence fees, which currently stands at 8 percent of revenues. TRAI’s letter recommended that the Universal Service Obligation Fund levy be reduced from 5 percent to 3 percent of adjusted gross revenue for all licences effective from April 1, 2015.
The industry had stated that it would like the licence fee to be reduced from the present 8 percent (which includes 5 percent USO levy) of revenue share, as it is considered to be very high. The regulator also recommended that with this reduction in USO, the applicable licence fee would become 6 percent from the present 8 percent of AGR. The 3 percent licence fee that directly accrues to the government would not change.
The regulator has recommended that spectrum usage charges (SUC) for all auctioned spectrum should be at a flat rate of 3 percent of AGR (adjusted gross revenue) as well as for the BWA spectrum should also be fixed at 3 percent where services are offered under CMTS/UASL/UL (AS)/UL.
The telecom regulator also recommended a relaxation in payout for spectrum that telecom operators acquired at auctions. Currently, telecom operators pay 25 percent or 33 percent upfront of total spectrum price and the remaining is paid over a ten-year period after a moratorium of two years. For spectrum payments in 700/800/900/2100/2300/2500 MHz bands, TRAI suggested payment spread over 18 years (18 equal installments with interest).
On the issue of interconnect charges, which the industry has sought to be made cost-based, the authority said that a consultation paper had been issued for it and that it would come up with recommendations based on the consultation process.
The regulator also proposed that the DoT may take up with the Ministry of Finance the issue of reduction of GST rate from the existing 18 percent to five percent by declaring the telecom sector as a core infrastructure industry and economy enabler in India.
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