According to the Cellular Operators Association of India (COAI), the payments made basis the adjusted gross revenue (AGR) by telecom service providers (TSPs) to the government, needs to be reconsidered under the changed regime and circumstances, as has evolved in the sector.
It added that it is evident that TSPs buy the spectrum for utilisation through transparent auction processes, paying a substantial amount for receiving the right to use the same. At the same time though, payments are also charged on the basis of the AGR on the TSPs, which is a double whammy for them, given the huge investments made towards procuring the spectrum.
COAI stated that while it was appropriate to have a license fee when licenses were bundled with the spectrum at the time of introduction of NTP 94, however, thereafter, spectrum was delinked from the license in 2012 and is currently assigned using a transparent and open auction procedure. With the separation of spectrum from the license and assigning it at market price, the justification for imposing licence fee as well ceased to exist, long back. The license fee, at best, should cover the cost of administration of the license only, which is to the order of 0.5 per cent to 1 per cent of the gross revenues, instead of the 8 per cent paid currently.
Further, it is a well-established fact that growth of telecom sector has a multiplier effect on the economy, by not only contributing to GDP growth but also increasing productivity and improving the standard of life of the common people. It is pertinent to note here that telecom companies in India, in addition to paying the telecom specific AGR related amount, also pay CSR, GST and corporate tax, just like any other company in the country. This puts companies engaged in the telecom business at a significant disadvantage vis-à-vis other businesses, severely limiting their surplus for investment in regular technological upgrades.
As per COAI, abolition/reduction of the licence fee related payments would facilitate the operators to plough the revenues back to the network for its continuous upgradation and expansion to be able to provide state-of-art services to the people of this country. It would further enable faster digital inclusion, especially in the remote areas, and help ease the life of the common man.
Furthermore, with the overarching promise of 5G and beyond, to connect and empower several other industries and provide a sizeable push to India’s digital economy towards a “Viksit Bharat’, we urge the government to consider our request on abolition/reduction of the AGR related fees at the earliest, as specified above.
