Trai for excluding non-core revenue of telcos

Telecom Regulatory Authority of India (Trai) is in favour of excluding non-telecom revenues earned by operators from the amount on which their annual licence fee is calculated. It has communicated its views to the department of telecom which is expected to take a decision on the matter shortly.

Both cellular and basic operators have also sought a meeting with Communication Minister Arun Shourie to discuss the issue. This is the first time since the fight over WLL limited mobility started in 1999 that cellular and basic operators have attempted to join hands on an issue. Cellular Operator's Association of India and Association of Basic Telecom Operators have written to the ministry demanding urgent resolution to the issue.

They said if the government agreed to exclude non-telecom revenues, while calculating the annual licence fee, then there could be a further reduction in tariffs. At present, operators pay between 12 per cent and 8 per cent of the total annual revenues to the government as licence fee.

ABTO has said telecom service providers, by their nature of being infrastructure service companies, require cash margins to be kept to get bank guarantees on which they earn interest but simultaneously pay interest charges on borrowings.

"Revenue earned from interest, dividends, sale of assets and other non telecom income should be kept out," said the ABTO letter to Shourie.

COAI, in its letter to the communication ministry, has also made similar requests adding that the DoT definition of annual gross adjusted revenue does not allow deduction for bad debts, discounts to subscribers, roaming charges, port charges and leased line charges.

"By not allowing deductions for these DoT is violating the well-established principle that if any income is charged to a tax then the underlying expense incurred to earn such incomes must also be allowed as a deduction," COAI said.