Telecom Companies Request Financial Support, Suggest Reductions in License Fees and GST Exemptions

Telecom providers on Tuesday (January 13) reached out to the Union Finance Ministry, highlighting licence fees as a significant financial strain on the industry and requested several relief measures in the forthcoming Union Budget.

The telecom companies contended that substantial statutory levies continue to pressure balance sheets and hinder the sector’s capacity to invest in network infrastructure. In their appeal, they advocated for a rationalisation of licence fees, recommending a sharp decrease from the current 3% of adjusted gross revenue to a range between 0.5% and 1% of AGR.

The telecom operators also called for a suspension of contributions to the Digital Bharat Nidhi, currently set at 5% of AGR. Another significant request pertains to indirect taxes; the operators have sought a waiver of goods and services tax on regulatory payments, including licence fees, spectrum usage charges, and spectrum payments.
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Furthermore, the operators have asked for the ability to use input tax credits to cover GST liabilities on licence fees and spectrum usage charges. Additionally, the telcos have requested a reassessment of spectrum pricing and assignment models.

Last year, the Department of Telecommunications suggested one-way spectrum sharing among telecom operators that would allow service providers to monetise and optimally utilise unused radio waves, as stated in a draft notification. Previously, operators could only share spectrum in the same frequency band upon receiving governmental approval.

According to the illustration in the latest draft regulation, a service provider with frequencies in a different band can share them with other operators possessing spectrum in a separate band within the same category and telecom circle.

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Industry analysts indicated that this initiative would enable operators like Vodafone Idea and BSNL to unlock and monetise their unused spectrum. It would also assist companies like Reliance Jio and Bharti Airtel in optimising their 5G services across various circles.

Under the new guidelines, the DoT has proposed eliminating the restriction of sharing spectrum within the same band, allowing for category-level sharing. This change would provide telecom operators with the flexibility to optimally deploy unused spectrum from partner service providers for high-bandwidth services.