Telecom department says stress in sector, expects lower revenue collection

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The Telecom Commission has written to the finance ministry requesting it to slash the telecom department’s non-tax revenue target for the current fiscal year by as much as 38 per cent, citing “severe financial stress” faced by the industry.

According to Mint, the telecom sector is under severe stress because of “rapidly declining revenues” of all the major telecom operators, the telecom department’s highest decision-making body said.

In the letter, the commission’s member (finance) Anuradha Mitra said that the non-tax revenue target for the department of telecommunications (DoT) may be revised to Rs295.24billion from a projected Rs473 billion.

It said licence fee collections will fall from a projected Rs166.64 billion to Rs92.55 billion in 2017-18. It expects spectrum usage charge collection to be significantly lower at Rs49.7 billion. It also expects spectrum auction proceeds this fiscal year to be nil even as DoT has sought the telecom regulator’s views on the next round of spectrum auctions.

Therefore, the estimated collection on account of spectrum charges, deferred payments and spectrum auction would be Rs170.56 billion, as against the earlier projection of Rs264.45 billion. The commission also estimates total liabilities of telecom firms at Rs7.29 trillion, far higher than the Rs4.5 trillion figure that has been widely reported.

The government has taken note of the state of the affairs in the sector. An inter-ministerial panel led by a senior official in the telecom ministry on 12 June started hearings on a possible bailout of debt-laden telecom companies even as most of the firms raised the pitch of their demand for one.

India’s telcos are loaded with debt—around Rs4.85 trillion at the end of December 2016—and face the burden of payments due to the government for spectrum (close to Rs3 trillion). They also face intense competition, with the average revenue per user of most falling sharply since the launch of Reliance Jio Infocomm Ltd’s services, which were initially free.

Jio’s impact has been such that the aggregate revenue of Indian telcos fell for the first time since 2008-09, to Rs1.88 trillion in 2016-17 from Rs1.93 trillion the previous year, according to brokerage CLSA. This is likely to decline further to Rs1.84 trillion in 2017-18.

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