COAI seeks incentives for telecom as sector tries to cope with data surge

Cellular operators Association of India (COAI) on Thursday sought a slew of incentives for the telecom industry at a time when the demand is at all time high, due to work-from-home over coronavirus fears, and the sector is struggling to cope up with the sharp surge in data requirement.

Telecom services have been categorized at essential services and the industry body that represents private telecom operators Bharti Airtel, Vodafone Idea and Reliance Jio has requested for refund of unitilized input tax credits, low cost funding, rationalization of levies and reduction of spectrum usage charges (SUC) among others.

Rajan Mathews, Director General, COAI noted that telecom companies are playing a critical role in addressing the challenges faced by individuals, corporates, governance services, emergency & utility services etc.

"There has been a severe disruptive impact on the global supply chain, demand & supply elements and most importantly, on the cash flows of the companies due to the slowing economic activities. This downturn will have an impact on all payments including those of employees, interest, loan repayments and taxes," he said in the letter to the Finance Minister Nirmala Sitharaman.

Telecom service providers have invested and will continue to invest significantly in the telecom infrastructure (capex and opex)) and it has enabled to meet the increased demand for telecom services. There has been a severe disruptive impact on the global supply chain, demand & supply elements and most importantly, on the cash flows of the companies due to the slowing economic activities. This downturn will have an impact on all payments including those of employees, interest, loan repayments and taxes.

On Wednesday, COAI had said that no additional spectrum will be required to maintain stability and quality of networks, amidst the Covid -19 crisis since the steps taken by the government to ease pressure on networks during the three-week lockdown is sufficient. Some of the steps include directing streaming services to reduce their content from HD to SD, local municipalities working with telcos to bring sealed towers back on line, some redistribution of traffic on the network, among other things.

COAI has requested for refund of the unutilized input tax credit immediately or else that soft loans at MCLR rate should be given to companies, using the GST input credit as collateral. They have urged the Government to rationalize the high burden of the Regulatory levies on the telecom service providers (TSP) with immediate effect. That the effective rate of the SUC should be reduced by 3% for all the TSPs and Licence Fee contribution should be immediately brought down from 8% to 3%. Note that most of these requests are an ongoing concern that COAI has been raising since the past year, more so after the October 2019 Supreme Court verdict on adjusted gross revenue (AGR) that came a huge financial blow to the telcos.

COAI added that the industry be exempt of the levy of GST on License Fees (LF), Spectrum Usage Charges and Payment of Spectrum acquired in auctions and exempt service tax on amount of LF/SUC payable by Telecom Operators in compliance with Supreme Court Order.