Govt's telecom revenue for FY24 expected to miss target by Rs 10,000 cr

Under the 2022 revival package totalling Rs 1.64 trillion and the Rs 89,047 crore allocation in 2023, the government is set to provide spectrum and settle adjusted gross revenue (AGR) dues for BSNL

The Department of Telecommunications (DoT) expects its receipts for the financial year 2023-24 (FY24) to fall short by around Rs 10,000 crore, compared to the revised Budget target of Rs 93,541 crore. This gap is attributed to payment adjustments concerning the state-owned Bharat Sanchar Nigam Limited (BSNL) and will be factored into FY25 accounting, according to a report in the Financial Express (FE).

Under a 2022 revival package totalling Rs 1.64 trillion and the Rs 89,047 crore allocation in 2023, the government is set to provide spectrum and settle adjusted gross revenue (AGR) dues for BSNL.

Experts told FE such government adjustments are categorised as non-cash receipts, wherein the state-owned telecom operator will not make direct cash payments but instead offer equity in exchange for spectrum and AGR liabilities.

This stands in contrast to the actual revenues generated for the government by private operators such as Jio, Airtel, and Vodafone Idea, which contribute through licence fees, spectrum usage charges, and auction proceeds.

BSNL's AGR dues

BSNL's AGR dues up to FY22 amounted to Rs 22,521 crore. To address this, the government injected Rs 26,983 crore, inclusive of goods and services tax (GST), to cover the AGR dues. In return, BSNL issued equity shares to the government through a rights issue. Although this sum was adjusted last May, it would have been recorded as receipts by the DoT, the report said.

In its financial statements for the October-December quarter, BSNL said that AGR dues for the next five years will be settled using the same principle. Similar adjustments are being made concerning the allotment of 4G/5G spectrum to BSNL.

Actual cash receipts of Rs 60,000 crore in FY24

According to officials, the DoT would have recorded actual cash receipts of around Rs 60,000 crore in FY24. This sum comprises approximately Rs 20,000 crore from operators' licence fees, Rs 4,000 crore from previous spectrum usage charges, Rs 23,000 crore from the second installment of 4G/5G spectrum purchased by operators in the 2022 auctions, and prepayments by telecom companies for past spectrum auctions, the report stated.

Officials noted that telecom receipts remain robust, attributed to the continual rise in telecom companies’ revenues driven by increased data consumption. Analysts estimate that in FY24, telecom operators' AGR reached Rs 2.37 trillion, marking a year-on-year growth of over 8 per cent. AGR serves as the basis for the companies’ payments of licence fees and Spectrum Usage Charges (SUC) to the government.

Experts project a 13 per cent Compound Annual Growth Rate (CAGR) in telecom operators' AGR over the next four years. For FY25, non-tax receipts for the DoT are forecasted at Rs 1.2 trillion, compared to the Rs 83,000 crore collected in FY24, the report said.