COAI seeks urgent relief measures to telecom industry

Amid concern over piling debt in the telecom sector, industry body Cellular Operators' Association of India (COAI) has urged the government to introduce financial reforms in the telecom sector, including cuts in levies, doubling the tenure of auctioned radio wave holdings, and a moratorium for spectrum payments.

The COAI, in its letter to Telecom Secretary Anshu Prakash, insisted that fundamental financial reforms are urgently needed in the sector to put it firmly on the path of sustained and orderly growth.

The industry has also batted for a reduction in interest rate for deferred payment liability, review of AGR definition, fixing of a floor price, waiver of financial and performance bank guarantees, among others.

Other suggestions include lowering cumulative regulatory taxes and levies burden by reducing License Fee, Universal Service Obligation (USO) levy, and Spectrum Usage Charges (SUC) to cover the administrative and regulatory cost.

The industry has batted for reduction of License Fee (LF) from 3 per cent to 1 per cent of Adjusted Gross Revenue (AGR) for all operators to cover the administrative and regulatory costs in line with the international norms.

In the letter, which is also marked a copy of its letter to Finance Minister Nirmala Sitharaman, and IT Minister Ashwini Vaishnaw, the industry body also advocated a reduction in present 5 per cent of AGR USOF contribution for all the players to 1 per cent.

In the letter dated August 17, 2021, to DoT, COAI said that the operators should also be incentivised in terms of reduced USO levies for additional coverage of villages.

"Reduce the interest rate on deferred spectrum payment liabilities to 4 per cent for all current and future payments including AGR payments," it said.

COAI has suggested the implementation of a "progressive" AGR definition to include only telecom revenue and redefines deductions.

Pointing out that telecom remains one of the most heavily taxed sectors, and added that the government needs to recognise that the current revenue sharing regime of around 32 per cent of revenue outgo as taxes and levies is "unsustainable". Such a high incidence of levies would be detrimental to the growth of the industry due to the perennial lack of surplus cash to reinvest, it contended.