Union Budget 2024: Govt retains Rs 1.2 trn telecom revenue in FY25

Non-tax telecom revenue higher by 28.5% despite muted spectrum auctions

The Centre has kept its non-tax revenue collection estimate from the telecom sector in the current financial year (FY25) unchanged at Rs 1.2 trillion, a figure it estimated in the Interim Budget presented in February. This is 28.5 per cent higher than the government's revised revenue collection target of Rs 93,541 crore from the sector for FY24.

The unchanged figure for FY25 is despite the latest round of 5G spectrum auction held in June, netting the government Rs 11,340.8 crore. The Centre had kept a reserve price of Rs 96,317.65 crore for the 10523.15 MHz worth of spectrum put to auction.

In the first 5G auction held in 2022, the Centre sold Rs 1.5 trillion worth of spectrum. But this time, the bidding ended on the second day after just seven rounds due to a tepid response from telecom operators. The next round of auctions is unlikely to happen in FY25, given that the government has committed to holding auctions on an annual basis, said officials at the Department of Telecommunications (DoT).

Higher operator payments

Higher incidence of payments by telecom operators is expected to drive the revenue estimates for FY25, officials said. "A larger proportion of deferred payments was received by the government in FY24, and the same is expected in FY25," a DoT official said.

The government's estimate of non-tax revenue collections from the telecom sector mainly relates to the licence fee from telecom operators and receipts on account of spectrum usage charges. The DoT collects recurring licence fees from operators, calculated at 8 per cent of the Adjusted Gross Revenue (AGR) of licensed operators. The collection of licence fee depends on the rate of licence fee, tariff and growth of the telecom service sector in the country.

The collections also include spectrum usage charges (SUC) levied on operators for spectrum acquired before September 15, 2021. This is calculated at a flat 3 per cent  of AGR.

Due to the changes in payment plans for spectrum, the government now receives lower SUC. At the 2022 5G auctions, while Bharti Airtel chose to pay a higher upfront amount, the other three companies - Reliance Jio, Vodafone Idea and the first-time bidder Adani Data Networks - opted for 20 equal annual instalments.

Telecom payments collated together, not counting advance payments by telcos, amounted to around Rs 55,000 crore in FY24, officials had said earlier.