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Telecom dept's budget allocation reduced as sector faces financial crunch

Telecom or communication services contribute revenue to the government in the form of license fees and spectrum charges.

Megha Manchanda  |  New Delhi 

Reliance Jio, telecom, towers, mobile towers
Telecom sector expected to fetch less revenue for government.

The telecommunications department's allocation in financial year 2019-20 has been revised downward to Rs 8740.11 crore, as mobile service providers are expected to contribute less in the form of spectrum usage charges and other levies that are calculated on the adjusted gross revenue of telecom firms.

The charges also include funds raised via spectrum auction and in the form of license fees.

Telecom or communication services contribute revenue to the government in the form of license fees and spectrum charges. Revenue earned from spectrum auction is also included.

According to an industry expert, who declined to be named, financial stress will lead to lower adjusted gross revenue of telecom companies..

For the current financial year (2018-19), the allocation has been revised to Rs 5325.17 crore from the Rs 9829.30 crore.

It is learnt that the Rs 8740.11 crore allocation for 2019-20 may include monetization of some of the assets or land bank of government-run Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd.

“Any tie-up between BSNL, MTNL and private companies will also benefit the government as the state-owned companies have the physical assets and last mile connectivity while the private firms have the technology to co-exist,” said the expert quoted above.

These synergies in the future would benefit the government in terms of revenues.

According to a data released by the Telecom Regulatory Authority of India, in January, spectrum usage charges were down by around 17% to Rs 1,043 crore for the quarter ended September 2018, compared with Rs 1,256 crore in the same period a year ago.

Adjusted gross revenue (AGR) of the industry was down 13.26% to Rs 36,142 crore for the reported period against Rs 41,669 crore during the same period last year. As the levies are paid on AGR, the downward trend is also witnessed in government proceeds. Licence fee was down by 11.08% to Rs 2,889 crore for the reported period compared with Rs 3,249 crore last year.

In terms of telecom operators, Reliance Jio, Tata, MTNL and Quadrant saw their AGR rise whereas Bharti Airtel, Vodafone Idea, BSNL and Reliance Communications witnessed a decline.

First Published: Fri, February 01 2019. 19:44 IST