Phone calls may get cheaper as panel mulls licence fee cut

Panel meet to take up cut in revenue share licence fee to a flat 6 per cent.

After a disappointing Budget 2006, telecom companies have a reason to cheer "" the telecom commission (TC) of the department of telecom will meet in the next 15 days to discuss a reduction in the tax burden on subscribers through a cut in licence fees.

The move may see a further reduction in telecom tariffs as the department of telecom (DoT) is in favour of reducing the revenue share licence fee to a flat 6 per cent of the adjusted gross revenue (AGR), from the existing 10 per cent, 8 per cent and 6 per cent, for A, B and C circles respectively.

This will bring about a uniform revenue share pattern across all telecom circles in the country, similar to the model that had been adopted for national and international long distance services beginning January this year.

The DoT has slashed the revenue share payable by national and international long distance (NLD and ILD) operators from 15 per cent to 6 per cent.

DoT sources said representatives from the finance ministry would be part of the TC meet. The joint meeting of the two ministries comes as the ministry of finance, in a letter dated April 4, had asked the DoT to consult it before undertaking a further cut in licence fees.

The finance ministry has added that the DoT should review its decision to reduce the licence fee for national and international long distance operators after a period of two years.

Reduction in licence fee has been a long pending demand as operators and the Telecom Regulatory Authority of India (Trai) have pointed out that Indian telecom companies spend between 17-26 per cent of their revenues on sector levies and taxes, which is amongst the highest in the world, while the same is less than 5 per cent for their counterparts in the subcontinent and China.

In its strategy paper on telecom, the department of economic affairs of the finance ministry has also advocated the move.