Government expects more revenue from telecom sector

The government expects an increase in non-auction revenue from the financially stressed telecom industry in 2019-20 compared to previous fiscal as the Department of Telecom hoping stabilisation in the sector.

The Budget documents presented in the Parliament on Friday showed provision of Rs 50,519.81 crores as non-tax revenue from the communication sector for 2019-20 against Rs 39,245 crores garnered in 2018-19. However, the Budget speech did not mention anything related to the telecom sector explicitly.

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The government earns revenue from mainly licence fees and spectrum usage charges from telecom operators.

In the 2018-19 fiscal revenue collection from the telecom sector was Rs 39,245 crores from the budgeted provision of Rs 48,661.42 crores. The earning was less in the previous fiscal mostly due to falling revenue from the sector, mainly due to price wars among operators.

This year the government expects more revenue as it also hopes stabilisation of the sector mainly ending price war, said an official in the Department of Telecom (DOT).

To address the financial stress of the sector, the DOT has already set up a committee to rationalise tax structure, review the universal services obligations fund (USOF), the spectrum usage charges.

However, the government is planning to go for spectrum auction this year that also involves the sale of frequencies for 5G services.

The telecom regulator Telecom Regulatory Authority of India (TRAI) has recommended auction of about 8,644 MHz of telecom frequencies at an estimated total base price of Rs 4.9 lakh crore. The DOT has recently decided to refer the recommendations back to the TRAI for review. However, some telecom firms have urged the government to defer the auction citing the financial stress in the sector.