Bharti Airtel Gains on Possible Rejig in Rural Telecom Fund

Bharti Airtel shares gained on Wednesday on reports that the Department of Telecommunications may reduce telecom operators' contribution towards Universal Service Obligation Fund (USOF).

Private telecom operators currently pay 5 per cent of their revenue towards this fund, which is aimed at improving telecom connectivity in rural areas. The USOF was created under the National Telecom Policy, 1999, for providing access to telecom services to people in rural areas at affordable prices.

In the last 10 years, the government has collected nearly Rs. 52,700 crore under the USOF, but only 30 per cent of the amount has been utilised so far, reports said.

The Cellular Operators Association of India, a telecom industry lobby, has been asking the government to reduce USOF contribution from 5 per cent to 1 per cent since a long time.

"The unified licence requires all entrants to rollout their networks to the block headquarter levels. So we are already required to penetrate the rural areas and on top of that levying an additional 5 per cent makes no sense. Almost, it is a double tax on the rural population itself. So, we have requested the government to reduce it to 1 per cent," said Rajan Mathews.

As of 12.26 p.m. shares in Bharti Airtel traded 1 per cent higher at Rs. 410, though Idea Cellular was down 0.83 per cent and Reliance Communication also traded 0.84 per cent lower at Rs. 112.70. The broader Nifty was down 0.49 per cent.