According to a pre-budget proposal by telecom industry body COAI, whose members include Vodafone Idea, Bharti Airtel and Reliance Jio, the telecom industry wants the government to suspend the Universal Service Obligation Fund (USOF), which financially supports the rollout of telecom services in rural areas, to ease the burden on service providers.
“Returning the industry’s unused Rs 35,000 crore of ITC, which cannot be used in the near future. The current market dynamics have led to the accumulation of a large amount of ITC.
“With the upcoming substantial capital expenditure, the credit will be further increased to further enhance the customer experience and realize the vision of Digital India,” COAI said.
Currently, telecom operators pay licensing fees at 8% of telecom service revenue, technically referred to as Adjusted Gross Revenue (AGR).
As part of telecom reforms, the government has eliminated several revenue streams that were part of the AGR and eliminated spectrum usage charges (SUC) for radio waves that will be purchased in future auctions.
“We are grateful for the government’s recent forward-looking structural and procedural reforms, which we believe will not only bring stability and sustainability to the industry, but will also boost citizens’ digital needs.
SP Kochhar, COAI Director General, said: “The telecommunications industry needs to invest in robust and reliable communications infrastructure to meet the growing demand for connectivity. There is an urgent need to ease the taxation burden on the industry.”
The Cellular Operators Association of India (COAI) has urged the government to reduce license fees from 3% to 1% and to reduce SUC rates by 3% for spectrum acquired in past auctions.
“The current license fee is 8% of AGR, which includes a 5% tax on USO funds. Existing USO fund pool of over Rs 59,000 crore is sufficient to meet USO’s targets for the next few years. The USO can be suspended until the use of the current corpus,” COAI said.
“Higher tariffs on telecom equipment are undermining the cost-effectiveness of telecom companies. Telecom equipment should be exempt from the BCD.
“Until India provides quality equipment at affordable prices, tariffs on 4G/5G related network products and other related products should be reduced to zero,” COAI said.