Budget 2020: DoT to meet industry on Jan 6 to discuss wishlist and issues

The Department of Telecom will meet industry players and various associations on January 6 to discuss the Budget wishlist and outstanding issues of the sector which is confronted with thousands of crores in unpaid statutory dues and burgeoning debt, according to sources.

A senior government official told PTI that the Department of Telecom (DoT) will be "supportive" of the industry's demand for reduction in levies, both licence fee and Spectrum Usage Charges (SUC), and will formally communicate its Budget related suggestions to the finance ministry after holding a detailed consultation with the telecom players.

"Telecom department supports reduction in licence fee and Spectrum Usage Charges...SUC should be reduced because money is being given by players in the auctions...they are making auction payments," the official said, adding that discussions will span various stakeholders in the industry like service providers, associations and others.

The telecom department plans to formally write to the Ministry of Finance in the first half of January, post the meeting.

Mobile operators as well as industry bodies like Cellular Operators' Association of India (COAI) and Tower and Infrastructure Providers Association (TAIPA) will be present at the meeting slated for January 6, a source said.

COAI had, last month, raised the issue of adjusted gross revenue (AGR) and sought cut in levies like licence fee and SUC during a meeting with Finance Minister Nirmala Sitharaman.

The industry has also asked the government to create an infrastructure bank that will raise tax-free bonds, the proceeds of which can be used to lend to the companies at lower rates.

COAI had also raised the issue of AGR and higher levies (like licence fee and SUC that are being paid by the industry) during the recent meeting.

"We represented that they be brought down... We urged that licence fee which is currently at 8 per cent be lowered to about 3 per cent, and SUC which is presently at 5 per cent be brought down to 1 per cent... and to see if it could be done over an appropriate period of time," COAI Director General Rajan Mathews had said after the meeting held on December 20 at North Block.

COAI had also asked the government to clear GST input tax credit dues worth about Rs 36,000 crore, while also seeking removal of the high import duties on telecom equipment.

The upcoming meeting at DoT is significant as the telecom industry is saddled with Rs 1.47 lakh crore in additional statutory dues in the wake of a recent Supreme Court ruling on AGR. Telecom companies owe the government Rs 92,642 crore in unpaid licence fee, and another Rs 55,054 crore in outstanding spectrum usage charges.

According to government data, the liabilities in the case of Bharti Airtel add up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the SUC dues (excluding the dues of Telenor and Tata Teleservices).

In the case of Vodafone Idea, this number stands at a cumulative Rs 53,038 crore, including Rs 24,729 crore of SUC dues and Rs 28,309 crore in licence fee.

The remaining liability is with state-owned BSNL/MTNL and some of the shut/bankrupt telecom companies.

The Supreme Court had allowed three months to the affected telcos to cough up the amounts due to the government, and the telecom department subsequently shot-off notices to players to pay their revenue share dues within the timelines stipulated by the court.

Besides the telecom companies, the DoT has also made it clear that the AGR order will apply to all licencees, including companies such as GAIL, RailTel and PowerGrid. As things stand today, such players, despite a smaller telecom exposure, may have to pay liabilities computed on their entire revenue.

The DoT had sent a letter to GAIL seeking Rs 1,72,655 crore in dues on IP-1 and IP-2 licences as well as Internet Service Provider (ISP) licence, and is seeking Rs 1.25 lakh crore from PowerGrid which had both a national long-distance as well as an internet licence.

Gujarat Narmada Valley Fertilizers and Chemicals (GNVFC) too has received a demand notice from the telecom department for payment of outstanding dues worth Rs 15,019 crore by January 23, 2020, pertaining to financial years from 2005-06 to 2018-19 in connection with VSAT and ISP licences held by the company.