COAI seeks implementation of new telecom policy from the next govt

The National Digital Communications Policy 2018 proposes to rationalise levies such as spectrum charges to rejuvenate debt-ridden telecom sector

Cellular Operators Association of India (COAI), an industry body representing telecom companies, has sought implementation of the National Digital Communications Policy 2018 from the new government. The policy approved by the Cabinet in September last year aims to attract $100 billion investment and create 4 million jobs in the sector by 2022.

It also proposes to rationalise levies such as spectrum charges to rejuvenate debt-ridden telecom sector. The proposed new telecom policy seeks to provide broadband access to all with 50 megabit per second speed 5G services.

COAI said that revenue continues to remain under pressure for the industry saddled with high debt, and for most players the earnings before interest, tax, depreciation and amortization or EBITDA generated was not sufficient to meet the interest expenses.

"The definition of adjusted gross revenue (AGR) should be reviewed to include revenue from licensed activities only ... Telecom Department should adopt the recommendations given by the regulator on the issue of determination of AGR," COAI Director General Rajan S Mathews said in New Delhi.

COAI said that income from interest, dividend and capital gains from sale of fixed assets, gains from forex fluctuation, income from rent, insurance claims, and distributors margin should not be included in the revenue of the telecom operators for the purpose of computation of licence fee and spectrum usage charges.

Also, revenue from sale of handsets and other subscriber terminals like routers should also be not included in the AGR, it said.

"Once you address the AGR definition issue, it has cascading benefits.. that is the first thing they (the new Government) should look at. Second, the issue of double taxation...you have got payment for spectrum upfront why are you continuing to tax the industry for the spectrum usage charge and licence...TRAI already recommended that SUC should come down to 1 per cent and licence fee should come down too," he said.

He added that if these outstanding issues are dealt with in the first 6-9 months by the new government post elections, it would yield "sizable benefits" for the industry.

"It would also send a clear signal to both industry and investors that the government is serious about getting the sector back on its feet," Mathews said.

Some of the major demands of the industry include reforms in AGR finalisation, allowing deductions of lease line/bandwidth charges and the charges paid by one telecom operator to another as 'pass through charges', alignment of the bank guarantees with the licence fee and SUC payouts of telecom operators, and refund of accumulated unutilised input tax credit, among others.

Under the Unified License Agreement, the licence fee currently is 8 per cent of the AGR. Further, in case the operator obtains spectrum, they also pay spectrum related charges, including payment for allotment and use of such radio waves.