Telecom firms protest sharing non-core revenue

In what will be the first joint representation to the government, cellular and basic operators are planning to approach the communication ministry demanding the exclusion of non-telecom revenues from the amount on which their annual licence fee is calculated.

This will be the first time since the fight over WLL limited mobility started in 1999 that cellular and basic operators are attempting to join hands on an issue. Both are also planning to jointly take up interconnection problems with Bharat Sanchar Nigam Ltd.

According to industry estimate, almost 10 per cent of some operators' revenues come from non-telecom functions like cross company deposits and interests earned from bank deposits.

"It is unfair that service providers have to include revenues from non-core business when paying the government the revenue share. We are requesting the government to redefine the definition of adjusted gross revenue to exclude revenues earned by the company from outside telecom," said an industry source.

At present, cellular and basic operators pay between 12 and 8 per cent of their annual revenues to the government as licence fee. According to sources, the method adopted by the department of telecom in deriving the revenue share sometimes overlooks the ground reality.

Giving an example of the "unfair" practice, a source said a service provider might take a loan at 10 per cent interest for investment purposes. But since the investment has to be made on a staggered basis, the company may keep the loan amount in a bank and earn interest of 5 per cent.

"As per the current definition of adjusted gross revenue, DoT will include the earnings from the 5 per cent interest accruing to the company without acknowledging the 10 per cent interest being paid by the company to service the loan amount," the source said.

They said the industry could reduce costs and thereby bring down tariffs further if their demand for exclusion of non-telecom revenues was accepted by the government.