The Cellular Operators Association of India is seeking reduced spectrum costs, abolition of certain levies, participation of large traffic generators in infrastructure development and clarity on the adjusted-gross-revenue issue in the Union Budget 2025. The COAI released its wishlist for the budget, comprising reliefs the industry body expects from the government.
In an exclusive interview with NDTV Profit, COAI Director General SP Kochhar underscored that the cost for purchasing spectrum for providing 5G services be reduced as the telecom companies cannot keep investing without a return on their investments.
In an exclusive interview with NDTV Profit, COAI Director General SP Kochhar underscored that the cost for purchasing spectrum for providing 5G services be reduced as the telecom companies cannot keep investing without a return on their investments.
A major component of the telcos' expenditure is on spectrum, the pricing of which ought to be different from the formula used for ascertaining 4G spectrum costs if the government wants the industry to blossom, according to the DG.
Stating that the tax imposed on Indian telcos is one of the highest in the world, Kochhar said that out of the 32% tax levied, 8% goes towards discharging the Universal Service Obligation Fund and the licence-fee component of the purchased spectrum.
Established in 2003, the USOF was introduced with the primary aim of ensuring that people in rural and remote areas have access to affordable and quality telecom services. Out of the telcos' adjusted gross revenue, 5% goes to the USOF.
As per COAI's budget wishlist, it seeks to abolish the USOF levy or alternatively wants the government to consider suspending the levy till the existing corpus of over Rs 86,000 crore is exhausted.
Arguing for a reduction in the licence fee for spectrum purchases, Kochhar said telcos pay licence fees for spectrum that has been purchased via auctions. "Telcos end up paying twice for the same spectrum," he said.
Presently, the telcos need to pay 3% of their AGR towards licence fee for the purchased spectrum.
In addition, Kochhar said large traffic generators should participate in the development of telecom infrastructure. Entities like WhatsApp, YouTube, Facebook and X constitute the LTGs in the communications space. "These entities end up contributing about 70–80% of traffic," Kochhar said.
He remarked that traffic from these entities overwhelms the network and a substantial investment is needed to keep the LTGs alive. "However, what we earn from our subscribers is not enough to match the investment required to keep LTGs afloat," Kochhar added.
"We strongly believe that large traffic generators should take the responsibility of participating in the development of telecom infrastructure as they ride on the networks created by telecom companies, earn profits, but don't pay anything for creation of the infrastructure," the COAI mentioned in its budget wishlist.
Kochhar urged that the LTGs contribute to the USOF fund, which will help reduce the burden of investment from telcos. At the end of the day, if these LTGs lose subscribers, the telcos lose subscribers, the vice versa being true as well. "It's a you scratch my back, I'll scratch yours kind of situation," Kochhar said.
On the contentious AGR issue, Kochhar said this is one thing that needs to be resolved at the earliest. "However, what goes in the mind of the government, we can't tell," he said, adding that if implemented, it would bring huge relief to the industry.
Earlier this week, NDTV Profit reported that the government is considering a proposal to relax the quantum of AGR dues owed to the exchequer by telecom companies.
If the proposal goes through, it will bring thousands of crores worth of relief to Vodafone Idea Ltd. and Bharti Airtel Ltd.
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