COAI asks govt for fiscal relief to offset AGR crisis

The Cellular Operators Association of India (COAI) has urged the government to reduce licence fee from 8 per cent to 3 per cent and asked for a slew of fiscal measures to offset the stress stemming from Supreme Court's verdict on adjusted gross revenue (AGR) dues.

"We request the government to allow set-off of GST credits lying with the government. Further, after the GST set-off, the payment of balance amount of interest, penalty, and interest on penalty be allowed in a staggered manner," said Director General Rajan Mathews.

"It is requested that a moratorium of three years be provided as we expect that it will take at least that much time to recover the health of the sector followed by a payment tenure of 15 years at a simple interest of 6 per cent," he said.

"The amounts payable under the Supreme Court judgement after mutual discussion may be frozen to avoid recurring claim of interest, penalty and interest on penalty. In the alternative, the government may consider granting loan equal to the AGR amount at 6 per cent rate of interest so that the AGR liability may be discharged immediately."

Mathews said this in a letter to Secretary at the Department of Telecommunications Anshu Prakash and marked the copies to ministers and senior officials at the Ministry of Telecommunications, Finance, the Prime Minister's Office and Chief Executive Officer at NITI Aayog.

The telecom industry has invested over Rs 10.44 lakh crore in setting up world-class mobile networks over the last 20 years and has committed around Rs 3.68 Lakh crore in spectrum through auctions since 2010. However, revenues and profitability have declined significantly.

The debt burden is well over Rs 7 lakh crore and there is still significant investment required in the future, said Mathews. The industry stress is well acknowledged by all stakeholders including the government.

"With the recent AGR judgement, the situation has become even more critical. The industry therefore requests support from the government to take steps to make the telecom sector sustainable," he said.

Given the current stress in sector, said Mathews, and the accumulated funds of over Rs 50,000 crore collected in the Universal Service Obligation (USO) Fund, it is requested that license fee be immediately reduced to 3 per cent.

India is the world's second-largest telecommunications market with a subscriber base of 115 crore. However, the average revenue per user of Rs 108 to 128 per month is the lowest in the world.

"Therefore, floor pricing is imperative to ensure the sector is sustainable and in a position to bear the deferred spectrum and AGR dues while continuing to invest in world-class networks and services," said Mathews.

"We believe that with the necessary and timely support of the government, the industry will rise from its current financial woes and play a strong role in contributing to achieving the objective of Digital India, achieve the targets envisaged in National Digital Communications Policy (NDCP) 2018 and in catalysing the national goal of achieving a five trillion dollar economy," he added.

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