The Department of Telecommunications (DoT) has specified that only the activities that are covered under the scope of the licence will be deemed as telecom activities, and used to calculate the adjusted gross revenue (AGR), reducing payment obligations of the telcos to the government. This comes as a relief as carriers need to pay 8 per cent of AGR as a licence fee.

The DoT has not defined non-telecom activities as they will differ from company to company. Further, DoT clarified that non-core telecom items like insurance claims and capital receipts issued by the Ministry of Information and Broadcasting (MIB), income from dividends, gains on mutual funds, gains from foreign rate fluctuations, credits provided by opex/capex vendors etc won’t be included while calculating AGR. While the sale of handsets and accessories will be included in AGR. The clarification by DoT will further streamline the licence fee assessments while minimising disputes.

The Cellular Operators Association of India (COAI) is looking closely at the clarifications issued by the DoT. However, the industry pointed out that DoT still insists on levying a licence fee on the sale of consumer premises equipment, which is not a licenced activity making it crucial to review the non-level playing field vis-a-vis standalone CPE sellers. Further, the Internet Service Providers Association of India stated that the imposition of licence fees on data centre services should also be exempted as it is an unlicensed activity.